Most British citizens when move to the US choose to rent their home instead of selling it. If you are filing as a US resident, since you are taxed on your worldwide income, you must report your British rental property on your Schedule E. You are allowed to reduce your rental income by your rental expenses, such as property tax, interest on home mortgage, cleaning, gardening, repair and maintenance, utility, ... . One important deduction that many UK citizens forget to take is depreciation.
If you own your rental property through a corporation or partnership, it is very important that instead of Schedule E, you report your rental activity in the corresponding "Foreign Informational" form, such as 5471 or 5865. Failure to do so can cause to pay large penalties for failure to file these forms. For more information on "Foreign Informational" forms, please visit this page.
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If you own your rental property through a corporation or partnership, it is very important that instead of Schedule E, you report your rental activity in the corresponding "Foreign Informational" form, such as 5471 or 5865. Failure to do so can cause to pay large penalties for failure to file these forms. For more information on "Foreign Informational" forms, please visit this page.
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Sale of Your Primary Residence In The UK
Once again if you are filing as a US resident, you must report the gain from the sale of your primary residence in the UK. There is, however, ways to minimize your taxable gain on the sale of your home, and that is why you should know about code section 121.
Code section 121 allows to exclude from the gain on the sale of your personal residence $500,000 (for married filing jointly) and $250,000 (if you are filing as a single or married filing separately). To qualify for this great code section, you must meet both condition: (1) The gain must be from the sale of your Primary Personal Residence and (2) you must have lived in that residence at least two years in the past five years prior to the sale.
Code section 121 allows to exclude from the gain on the sale of your personal residence $500,000 (for married filing jointly) and $250,000 (if you are filing as a single or married filing separately). To qualify for this great code section, you must meet both condition: (1) The gain must be from the sale of your Primary Personal Residence and (2) you must have lived in that residence at least two years in the past five years prior to the sale.
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Phone: (424) 888-3878
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