branmin

Have a substantial sum, over £1M from properties recently sold in the UK this year and sitting in a UK Bank. Hoping that the exchange rates will improve(but could equally go down) but really should have the money over here(US) where I have been since 1994. Easier said than done these days.

These properties were from an Inheritance and 40% IHT has already been paid. Will obviously have to fill these details out in 2018 for the 2017 tax year for FBAR requirements. Not being a resident of the UK wondered what my(further) tax implications would/could be(if any) in the UK plus in the US?

Have not as yet filled out Form 2002(double taxation)plus Form 8802 which needs to go with 2002(application for US Residency Status)

Thx very much.

Pulaski

Did you inherit properties, and if so, when?

Or did you inherit cash that is the proceeds of properties the deceased left with instructions to sell them?

branmin

Deceased died in 2012 and had previously owned the properties which we inherited per the terms of the will and we sold in May and June of this year.

Pulaski

So you have both UK and US CGT considerations.

branmin

Thx for the replies. I thought being a non-resident for 13 years would exonerate us from UK CGT, plus already having paid 40% IHT? Could you please be a bit more specific with the wording "considerations".

Pulaski

The UK started levying CGT on properties owned by people who are not tax resident in the UK, effective from April of 2015.

Also, so far as I understand the tax rules, if you inherit a property under both US and UK tax regimes, you get a "free uplift" to market value, but you pay inheritance tax. That is fine if you sell immediately, but if you hold for a period you now start accruing taxable gains for the period after you inherited the property, assuming the value of the property rises.

So it sounds to me like you will have CGT to pay in the UK on gains since April 2015, plus CGT in the US on the gains since you inherited the properties, though given the collapse of sterling that might be small or zero. Any CGT paid in the UK can be set against CGT due in the US.

Do you live in a state where tax is levied on inheritances you receive?

branmin

Great and so helpful information as usual Pulaski, nearly had me pooping in my pants.
Florida is exempt from IHT it would appear. Couple of points though. when you say one will have to pay CGT in the UK on gains from April 2015, gains from what? In other words from April 2015 say to June 2017, what am I basing the gains on?

In the US, why would the collapse of sterling give me a small or indeed zero amount to pay? You mentioned that CGT tax paid in the UK can be offset against CGT due in the US? As mentioned I haven't as yet filed the double taxation forms but will probably need to do so because of UK pensions coming up in order to become tax exempt in the UK and because of the offset you stated, would this need to be done?

I note in the form 2002 they specifically ask.."Since you left the UK have you continued to own or rent a property in the UK?" I presume one needs to say yes to this question as technically one never owned it but inherited it.

Again thx for all your help.

Pulaski

If I understand the rules correctly, the difference between the value on April 5, 2015 and the sale price, less any capital expenditure, less indexation allowance.
Because the dollar value of the property value at inheritance was high, and has fallen with the value of sterling. E.g. a property was worth £200,000 when you inherited it in 2012, when the value of the pound was $1.60, making the dollar value of the property $320,000. When you sold it in 2017 you sold it for £240,000 but the value of the pound was $1.25. In 2017, at $1.25, £240,000 is worth $300,000, so you made a dollar loss of $20,000.
Honestly, I don't know. They're asking if you had a home to stay/live in, as that can have significant tax consequences. It would depend on the state of the property, and obviously whether it is residential property, not to mention whether you had rented it to someone else. You're welcome.

Cook_County

If I understand correctly HMRC are already charging penalties for failure to file non-resident CGT returns with them within 30 days of sale. You may need to get your boots on and file with HMRC...


From a US perspective, you will need to file Form 3520 for the year you received the inheritance and pay US tax on any gain or report any loss. You doubtless have been including the estate as an asset on Form 8938 for any years while it was still in administration and will file both an 8938 and an FBAR next year for 2017.

branmin

https://www.irs.gov/businesses/corpo...rm-8938#CashQ2

From what I read here.......Foreign real estate does not need to be reported on Form 8938

Pulaski

But "while in administration" it was (in) a foreign trust.

branmin

Oh boy, This is getting complicated and worrying. Trying to find where it says "while in administration" and I read the words "foreign trust" as something else. Your money is not your own anymore is it?

Pulaski

Between death of the testator and the assets being distributed, the bequests are in a trust.

branmin

f I understand correctly HMRC are already charging penalties for failure to file non-resident CGT returns with them within 30 days of sale. You may need to get your boots on and file with HMRC...

Even though IHT has already been paid?

Pulaski

IHT has nothing to do with CGT. Per post #6 above, you are liable for CGT between the date you inherited the property and the date you sold it.