Selling an inherited property

Hello you helpful bunch!

I have previously mentioned on this forum that I inherited a property from my mother when she passed. This property is in Ireland and I have been renting it put since I inherited it in 2016. I have been declaring the rental income on my US taxes.

I now want to sell the property and im liable for Capital Gains on circa €100,000. In Ireland this means I will owe 33% on the gain so circa €33,000 (less allowable fees). I will also have to pay Capital Gains in the UK, to HMRC, but I think I can offset the Irish capital gains paid so I think i shouldn't owe anything to HMRC. my question is will I owe anything to the IRS.

A secondary part to this question is how do i then move a significant amount of  money from Ireland to the UK both in terms of exchange rate and not trigger issues with the IRS/FBAR?

A secondary part to this question is how do i then move a significant amount of  money from Ireland to the UK both in terms of exchange rate and not trigger issues with the IRS/FBAR?

You are required to file an FBAR wherever in the world your money is (outside of the US if $10k or over) so it makes no difference whether it's in Ireland or the UK.
We usually recommend Wise for moving smaller amounts of money but for larger amounts it might be better shopping around.

You are required to file an FBAR wherever in the world your money is (outside of the US if $10k or over) so it makes no difference whether it's in Ireland or the UK.
We usually recommend Wise for moving smaller amounts of money but for larger amounts it might be better shopping around.

I've read stories that when using apps like that the exchange gets held up due to moving money internationally. My FBAr will help me here as i have been filing every year and this is, i think, an evidence trail of the money.

I am pretty sure that you will also be liable to capital gains tax in the USA when you sell the house, just like any house you own overseas.  However, the gain will be calculated from the value of the house on the day you inherited it.  You can also subtract the costs to sell it plus any capital improvements you have made to it since inheriting it.

I've read stories that when using apps like that the exchange gets held up due to moving money internationally. My FBAr will help me here as i have been filing every year and this is, i think, an evidence trail of the money.

As to moving money then Wise is an excellent choice, whether or not you use their app. In January our daughter moved hundreds of thousands of USD to buy a house in the UK. She sent the money from her US Bank (Chase) direct to the solicitors using Wise as the forex company and it happened pretty well overnight so not sure what delays you are hearing about. I use the Wise app for smaller amounts, $5k - $15k, and it happens same day.  Going direct from her US bank to the solicitor's bank avoided her hitting the FATCA limits so no extra forms with her IRS filing required. (Her UK accounts do exceed $10k so she files FBAR)

The rental activity is being reported on Schedule E and Form 8858. If you elect by filing Form 8833, you can Form 1116 to claim foreign tax credits.  In the year of sale you will again file Schedule E & Form 8858 plus Form 4797. You will need to calculate depreciation to be recaptured in the year of sale.

You’ll easily figure the actual gain from the 3520 you filed in 2017.

Wise Is my number one for transfers. The last transfer had taken 4 seconds to arrive into my U.K account!

Thanks for the replies.

my question is essentially as follows: its not my principal private residence. I will be disposing of an asset (property) and i will make circa £100k profit.. I will be liable for CGT in Ireland and I will have a small CGT liability in UK, primarily due to the exchange rate. Will I owe anything to the IRS? I will get proper tax advice on this.

Thanks for the replies.

my question is essentially as follows: its not my principal private residence. I will be disposing of an asset (property) and i will make circa £100k profit.. I will be liable for CGT in Ireland and I will have a small CGT liability in UK, primarily due to the exchange rate. Will I owe anything to the IRS? I will get proper tax advice on this.

Yes, you will owe taxes, probably, to the IRS.  You need to treat the sale as reported above. Guya pointed out that since you have been reporting rental income from it to the IRS then that should have included a depreciation sum each year.  When we had a UK rental house while living in the USA the taxable income was rent - expenses, which included mortgage interest, house depreciation and in our case furniture/appliances depreciation

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Yes, you will owe taxes, probably, to the IRS.  You need to treat the sale as reported above. Guya pointed out that since you have been reporting rental income from it to the IRS then that should have included a depreciation sum each year.  When we had a UK rental house while living in the USA the taxable income was rent - expenses, which included mortgage interest, house depreciation and in our case furniture/appliances depreciation

I'll be honest I don't think my current accountant is submitting this element of my taxes correctly!

I'll be honest I don't think my current accountant is submitting this element of my taxes correctly!

For the first 6 years we were living in the USA the company paid for accountants Deloitte & Touche to do our taxes and they asked me to prepare a profit and loss statement showing house and furniture depreciation, mortgage interest, rental agency fees and repairs done during the year.  We lost money every year except the last year, but by the time we sold the price was double what we paid for it, then we had to list all the fees in selling the house, the capital improvements etc so the IRS return showed the taxable capital gain.

I'll be honest I don't think my current accountant is submitting this element of my taxes correctly!

You are required to recapture allowable depreciation in the year of sale. This is not optional. Whether or not you benefited from depreciation, you will report the allowable amount as taxable in the year of sale.  You may incidentally decide you need a new accountant.

I think you will be able to offset the Irish capital gains tax (33%) against the US capital gains tax (max 20%)  , so you wont pay a penny to the IRS.


US expats can utilize the Foreign Tax Credit to offset capital gains taxes by leveraging the tax relief provision that allows US taxpayers who have paid foreign taxes on their income, including capital gains from the sale of foreign property, to offset their US tax liability with the amount of foreign taxes paid.



https://www.greenbacktaxservices.com/knowledge-center/foreign-capital-gains/ [nofollow]

I think you will be able to offset the Irish capital gains tax (33%) against the US capital gains tax (max 20%)  , so you wont pay a penny to the IRS.


US expats can utilize the Foreign Tax Credit to offset capital gains taxes by leveraging the tax relief provision that allows US taxpayers who have paid foreign taxes on their income, including capital gains from the sale of foreign property, to offset their US tax liability with the amount of foreign taxes paid.



https://www.greenbacktaxservices.com/knowledge-center/foreign-capital-gains/

I can easily see some US tax - either NIIT or on recaptured depreciation. Electing to claim foreign tax credits is - incidentally - now way, way more complex than in the past: https://www.americansabroad.org/files/1268/