UK Capital Gain tax on a US property

mogsie

I am a UK resident and I am due to make a $15,000 gain ( after expenses, fees etc ) on a purchase/rehab/sale of a property in Toledo Ohio ( bought and sold in tax year 2013 - 2014 ).
I will be paying US tax as part of my US tax return - my query is around the implications for my UK tax return.

I will not have made any other capital gains in 2014 - 2015. As the gain is circa £10,000 - does this mean it will qualify for my UK CG tax free allowance and does need to be detailed on my tax return ?


Any advice would be appreciated....


Thanks

Cook_County

mogsie wrote: »

I am a UK resident and I am due to make a $15,000 gain ( after expenses, fees etc ) on a purchase/rehab/sale of a property in Toledo Ohio ( bought and sold in tax year 2013 - 2014 ).
I will be paying US tax as part of my US tax return - my query is around the implications for my UK tax return.

I will not have made any other capital gains in 2014 - 2015. As the gain is circa £10,000 - does this mean it will qualify for my UK CG tax free allowance and does need to be detailed on my tax return ?


Any advice would be appreciated....


Thanks

From a US perspective,if this is your only income the gain may be taxed at the zero percent rate, but you might still owe some tax at the 25% rate on recaptured depreciation.


From a UK perspective,the gain is not $15,000 as you have to convert using spot rates on the dates of purchase and sale and fill in the result on the capital gains pages.

Spidernick

In addition to the above (which could give a higher or lower gain in sterling depending on the exchange rates at purchase and sale, but given that these are within a year I'd hope the fluctuation would not be significant) are you a UK 'domicile' (as a starter were you born to British parents?) and will you bring the sale proceeds into the UK? These answers will affect the UK tax treatment.

mogsie

Thanks cook_county for your quick reply - much appreciated - so after converting the gain to GBP using spot rates and its say £10,000.
Does this need to be detailed on your UK tax return even though is is below the CGT personal threshold ?

mogsie

Hi Spiderwick - think my last post crossed with yours - thanks for the reply. In answer to your questions - yes I am a UK 'domicile' and yes the sale proceeds will be transferred to my account in the UK. Unless it's better to keep the money in the US and re-invest. It's really the UK tax situation and reporting procedure I am concerned with - I have arranged for my US tax return to be prepared by a US CPA/Attorney. Thanks again

purdyoaten

You will need to declare this as the proceeds, presumably, exceed £44000 which is four times the annual exemption. Normally you would also complete the foreign pages SA106 to claim relief for the tax deducted in the US but, if no UK tax on this source, there is no need.

JasonPr

mogsie wrote: »

Thanks cook_county for your quick reply - much appreciated - so after converting the gain to GBP using spot rates and its say £10,000.

Did you convert the USD gain to GBP? If so, that's not correct. You have to take the purchase price in USD and convert to GBP on the purchase date, take the sale price in USD and convert to GBP on the sale date and work out the gain this way.

Cook_County

You may prefer to have your American tax return and your UK tax return prepared here in the UK by the same accounting firm so that the positions taken are consistent. Yes, you have to calculate and declare the gain or loss on the capital gains pages as a UK domiciliary, whether or not there is UK tax payable.

mogsie

Thanks for all the help - I will declare the gain on my tax return after doing the correct calculations ( purchase and sale price converted to GBP on the correct date ) - final question if this is the only gain - can it be offset again the £11,000 CGT annual allowance ?

purdyoaten

mogsie wrote: »

Thanks for all the help - I will declare the gain on my tax return after doing the correct calculations ( purchase and sale price converted to GBP on the correct date ) - final question if this is the only gain - can it be offset again the £11,000 CGT annual allowance ?

Your £11000 allowance is available to set against all gains made in the same year