UK Savings, US Tax on Renting Out Home Abroad
Feb 6th 2013, 10:56 am
#1
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Joined: Feb 2013
Posts: 8
UK Savings, US Tax on Renting Out Home Abroad
Hiya
I have recently joined this site, but have been viewing for several years.
I was married seven years to my USA husband, but unfortunately we got divorced last year. No kids attached. I have moved to the Orlando area recently and I am currently not working. Thank god I did not sell my UK house as I am now living off the rental income.
I have searched this forum relating to tax questions on the above and have found some useful information on the topic. However, I would just like to have some clarification on the matter pertaining to the correct Tax forms to use for my US Tax filing. (I will not be doing the filing myself).
1) I have UK savings of over 16 thousand pounds. I see on the site that you have to file a FBAR Form. I am not sure what the abbreviation stands for as I could not locate the form on the irs.gov website.
2) I have a rental property in the UK for the tax year 2012. I contacted the IRS to find out the correct forms to file for this property income. From “the horses month” I was told I need Form Schedule E, 10.40 Supplementary Income or Less for that. In addition, I need Form 10.40 Individual Tax Return
3) Can anyone recommend a Tax Advisor in the Orlando area that deals with foreign/worldwide income?
Thanks in Advance
Florida Res
I have recently joined this site, but have been viewing for several years.
I was married seven years to my USA husband, but unfortunately we got divorced last year. No kids attached. I have moved to the Orlando area recently and I am currently not working. Thank god I did not sell my UK house as I am now living off the rental income.
I have searched this forum relating to tax questions on the above and have found some useful information on the topic. However, I would just like to have some clarification on the matter pertaining to the correct Tax forms to use for my US Tax filing. (I will not be doing the filing myself).
1) I have UK savings of over 16 thousand pounds. I see on the site that you have to file a FBAR Form. I am not sure what the abbreviation stands for as I could not locate the form on the irs.gov website.
2) I have a rental property in the UK for the tax year 2012. I contacted the IRS to find out the correct forms to file for this property income. From “the horses month” I was told I need Form Schedule E, 10.40 Supplementary Income or Less for that. In addition, I need Form 10.40 Individual Tax Return
3) Can anyone recommend a Tax Advisor in the Orlando area that deals with foreign/worldwide income?
Thanks in Advance
Florida Res
Feb 6th 2013, 11:59 am
#2
BE Forum Addict
Joined: Aug 2004
Posts: 4,754
Re: UK Savings, US Tax on Renting Out Home Abroad
http://www.irs.gov/pub/irs-pdf/f90221.pdf
Be sure to enter any interest or gains from it on your US taxes. If you are not a UK resident and have UK interest income you should file a R-105 with you UK bank so that no UK tax will be withheld at source. If your foreign account is just a saving account you simply enter the interest on your Schedule B and 1040 along with your US interest. If you have things like stocks and shares ISAs or UK mutual funds the reporting will be a lot more complicated.
2) I have a rental property in the UK for the tax year 2012. I contacted the IRS to find out the correct forms to file for this property income. From “the horses month” I was told I need Form Schedule E, 10.40 Supplementary Income or Less for that. In addition, I need Form 10.40 Individual Tax Return
As the rental is in the UK you also need to consider the UK tax implications. If you are not UK resident you can apply to receive the rent free of UK tax.
http://www.hmrc.gov.uk/international/nr-landlords.htm
Last edited by nun; Feb 6th 2013 at 12:05 pm.
Feb 6th 2013, 3:49 pm
#3
Democracy advocate
Joined: Mar 2006
Posts: 12,460
Re: UK Savings, US Tax on Renting Out Home Abroad
FBAR is not an IRS form, it's actually a Treasury form. Anyway here it is
http://www.irs.gov/pub/irs-pdf/f90221.pdf
Be sure to enter any interest or gains from it on your US taxes. If you are not a UK resident and have UK interest income you should file a R-105 with you UK bank so that no UK tax will be withheld at source. If your foreign account is just a saving account you simply enter the interest on your Schedule B and 1040 along with your US interest. If you have things like stocks and shares ISAs or UK mutual funds the reporting will be a lot more complicated.
That is correct, the Schedule E is where you calculate the net income from a rental to enter it on 1040, line 17. Remember you can deduct many of the expenses you have in renting the property and depreciate many costs.
As the rental is in the UK you also need to consider the UK tax implications. If you are not UK resident you can apply to receive the rent free of UK tax.
http://www.hmrc.gov.uk/international/nr-landlords.htm
http://www.irs.gov/pub/irs-pdf/f90221.pdf
Be sure to enter any interest or gains from it on your US taxes. If you are not a UK resident and have UK interest income you should file a R-105 with you UK bank so that no UK tax will be withheld at source. If your foreign account is just a saving account you simply enter the interest on your Schedule B and 1040 along with your US interest. If you have things like stocks and shares ISAs or UK mutual funds the reporting will be a lot more complicated.
That is correct, the Schedule E is where you calculate the net income from a rental to enter it on 1040, line 17. Remember you can deduct many of the expenses you have in renting the property and depreciate many costs.
As the rental is in the UK you also need to consider the UK tax implications. If you are not UK resident you can apply to receive the rent free of UK tax.
http://www.hmrc.gov.uk/international/nr-landlords.htm
Feb 6th 2013, 5:09 pm
#4
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Joined: Aug 2004
Posts: 4,754
Re: UK Savings, US Tax on Renting Out Home Abroad
I think we should define that a bit more - my understanding is that the NRL1 exemption removes the need for the letting agent (or tenant) to remove 20% tax each month - BUT that you still have to pay UK tax on rental income profit (subject to normal deductions) at the end of the year via a Self-Assessment tax return.
Feb 6th 2013, 6:25 pm
#5
Wondering if...
Joined: Apr 2009
Location: Clarence, NY
Posts: 1,214
Re: UK Savings, US Tax on Renting Out Home Abroad
Nothing is mentioned about previous tax years. If these UK savings or rental income existed in prior years was the appropriate paperwork filed? Was an FBAR filed?
Feb 7th 2013, 11:46 am
#6
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Joined: Feb 2013
Posts: 8
Re: UK Savings, US Tax on Renting Out Home Abroad
FBAR is not an IRS form, it's actually a Treasury form. Anyway here it is
http://www.irs.gov/pub/irs-pdf/f90221.pdf
Be sure to enter any interest or gains from it on your US taxes. If you are not a UK resident and have UK interest income you should file a R-105 with you UK bank so that no UK tax will be withheld at source. If your foreign account is just a saving account you simply enter the interest on your Schedule B and 1040 along with your US interest. If you have things like stocks and shares ISAs or UK mutual funds the reporting will be a lot more complicated.
http://www.irs.gov/pub/irs-pdf/f90221.pdf
Be sure to enter any interest or gains from it on your US taxes. If you are not a UK resident and have UK interest income you should file a R-105 with you UK bank so that no UK tax will be withheld at source. If your foreign account is just a saving account you simply enter the interest on your Schedule B and 1040 along with your US interest. If you have things like stocks and shares ISAs or UK mutual funds the reporting will be a lot more complicated.
Thank you for your informative reply. My Foreign/Saving accounts are ISA, Flexible and Guarantee Saving accounts. I did not inform my banks that I am living abroad, I will complete the relevant form ie R-105 when I return for holiday later this year.
FloridaRes
FBAR is not an IRS form, it's actually a Treasury form. Anyway here it is
http://www.irs.gov/pub/irs-pdf/f90221.pdf
That is correct, the Schedule E is where you calculate the net income from a rental to enter it on 1040, line 17. Remember you can deduct many of the expenses you have in renting the property and depreciate many costs.
As the rental is in the UK you also need to consider the UK tax implications. If you are not UK resident you can apply to receive the rent free of UK tax.
http://www.hmrc.gov.uk/international/nr-landlords.htm
http://www.irs.gov/pub/irs-pdf/f90221.pdf
That is correct, the Schedule E is where you calculate the net income from a rental to enter it on 1040, line 17. Remember you can deduct many of the expenses you have in renting the property and depreciate many costs.
As the rental is in the UK you also need to consider the UK tax implications. If you are not UK resident you can apply to receive the rent free of UK tax.
http://www.hmrc.gov.uk/international/nr-landlords.htm
Yes I did complete the relevant forms in the UK for UK Self Assessment Tax, from HM Revenue and Taxes in 2012. The UK exempt me from tax last year as I am a landlord living overseas. That was done on form SA1 in the UK.
FloridaRes
Feb 7th 2013, 11:56 am
#7
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Re: UK Savings, US Tax on Renting Out Home Abroad
I think we should define that a bit more - my understanding is that the NRL1 exemption removes the need for the letting agent (or tenant) to remove 20% tax each month - BUT that you still have to pay UK tax on rental income profit (subject to normal deductions) at the end of the year via a Self-Assessment tax return.
Thank you for your informative reply. I did complete the NRL1 UK Tax Form in 2011 when we decided to rent out the property to tenants.
FloridaRes
Feb 7th 2013, 12:10 pm
#8
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Re: UK Savings, US Tax on Renting Out Home Abroad
Yes that's a good point. Any profits from UK rental income are taxable in the UK....however, given the UK personal allowance of 8.5K pounds and the deductions you can take for expenses the OP might not have much UK income to be taxed. Any tax you pay in the UK should be claimed as a tax credit on your US taxes.
With the cost of the Management & Letting fees, Repairs, Insurance and other deductions for 2011 to 2012, the UK Tax office reimbursed me about 500 to 600 pounds from the UK Self Assessment Tax.
FloridaRes
Feb 7th 2013, 12:34 pm
#9
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Re: UK Savings, US Tax on Renting Out Home Abroad
Thank you for your informative reply.
Well for previous tax years up to 2010 I was still working in London and filed separately at the US embassy/IRS office, on Grosvenor Square. They did the forms for me but I have never heard of FBAR form until now.
While living in the USA he worked and we filed jointly.
The UK house was only rented out in 2012.
FloridaRes
Feb 7th 2013, 1:43 pm
#10
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Joined: Apr 2009
Location: Clarence, NY
Posts: 1,214
Re: UK Savings, US Tax on Renting Out Home Abroad
Hello Celticgrid
Thank you for your informative reply.
Well for previous tax years up to 2010 I was still working in London and filed separately at the US embassy/IRS office, on Grosvenor Square. They did the forms for me but I have never heard of FBAR form until now.
While living in the USA he worked and we filed jointly.
The UK house was only rented out in 2012.
FloridaRes
Thank you for your informative reply.
Well for previous tax years up to 2010 I was still working in London and filed separately at the US embassy/IRS office, on Grosvenor Square. They did the forms for me but I have never heard of FBAR form until now.
While living in the USA he worked and we filed jointly.
The UK house was only rented out in 2012.
FloridaRes
I've no idea where you were resident when you were working in London, or what your status was. But you were completing IRS tax paperwork? If that was actually necessary I suspect you should have been completing the FBAR too, in which case you might want to consider completing FBAR for previous years and back-filing with an appropriate covering letter. Or you may not wish to do so.
Either way, if I was you I would at least establish whether or not you should have been filing the FBAR prior to this year - including while filing jointly. Educate yourself as to whether you should have been filing and, if so, the possible consequences.
Feb 7th 2013, 2:24 pm
#11
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Re: UK Savings, US Tax on Renting Out Home Abroad
I am now quite confused.
I've no idea where you were resident when you were working in London, or what your status was. But you were completing IRS tax paperwork? If that was actually necessary I suspect you should have been completing the FBAR too, in which case you might want to consider completing FBAR for previous years and back-filing with an appropriate covering letter. Or you may not wish to do so.
Either way, if I was you I would at least establish whether or not you should have been filing the FBAR prior to this year - including while filing jointly. Educate yourself as to whether you should have been filing and, if so, the possible consequences.
I've no idea where you were resident when you were working in London, or what your status was. But you were completing IRS tax paperwork? If that was actually necessary I suspect you should have been completing the FBAR too, in which case you might want to consider completing FBAR for previous years and back-filing with an appropriate covering letter. Or you may not wish to do so.
Either way, if I was you I would at least establish whether or not you should have been filing the FBAR prior to this year - including while filing jointly. Educate yourself as to whether you should have been filing and, if so, the possible consequences.
With reference to the above, I am a (LPR) resident of the USA, but I completed a re-entry permit to continue to work in the UK and stay in my UK home. I will check out the details prior to this year about the FBAR. I need a Tax Advisor in Orlando that deals with Overseas/Worldwide income.
Regards
FloridaRes
