Selling property

Hi all,
 
I tried a search but couldnt find anything. If I sell a property this side of the atlantic (Ireland) what are the tax implications for being a USC based in the UK?

Property sale would be circa euros 280,000.

thanks

Dano

Do you live in the Republic of Ireland (EU) or Northern Ireland (UK)?

Or do you live in the UK and are selling a property in the Republic of Ireland?

Is the property your primary residence?

I am an irish passport holder and a USA passport holder. I own a property in Ireland which i used to consider my principal private residence, even though i work and live in the Uk (renting). The irish define PPR as still being valid if you are working abroad. However for the last three years i have rented the property out. But i now want to sell and buy a place in UK as i no longer desire to return to Ireland.

I have an irish tax accountant who has informed me that as i rented it out for three years i will have to pay Capital Gains and some of the increase in value. So im wondering what the implications is for US taxes.

Thanks

Dano

I am an irish passport holder and a USA passport holder. I own a property in Ireland which i used to consider my principal private residence, even though i work and live in the Uk (renting). The irish define PPR as still being valid if you are working abroad. However for the last three years i have rented the property out. But i now want to sell and buy a place in UK as i no longer desire to return to Ireland.

I have an irish tax accountant who has informed me that as i rented it out for three years i will have to pay Capital Gains and some of the increase in value. So im wondering what the implications is for US taxes.

Thanks

Dano

Thanks for the clarification.  Since it is not your primary residence I would expect you to have to pay capital gains tax in the USA as well, and use foreign tax credits to offset some of the taxes.  But I've not been in that exact situation myself and am not a tax expert.  We did once have to pay US capital gains tax on a UK house that we sold while we were living in the USA.

Thanks for the help I will assess this with my US based tax accountant. CGT on the property is circa 10,000 euros. Thing is I will have to pay CGT in the UK also.... so might be triple taxed on it!

It may be prudent to use the same accountant in both the US and the UK so that reporting is consistent.
US tax - the rental activity will currently be reported on Schedule E, Form 8858 and a Foreign Branch Form 1116.  None of these 3 forms are optional, if any have been overlooked, you'd be thinking whether to be filing amended US returns. On sale of the property you will calculate any gain on sale as well as depreciation recapture. These will be reported as UK taxable with a credit for Irish tax paid on any doubly taxed gain.

UK tax - you'll currently be reporting the rental activity to HMRC each year. The UK will charge tax on any gain after allowing any pro-rata main residence relief. The UK will allow a credit for any Irish tax paid on any part of the gain that is doubly taxed.

Have a look at the fx implications as well. As the EUR to USD is virtually identical, you may have phantom fx gains owed as well.

It may be worth while holding off for more economic stability, as if you can get below the $250k capital gains and fx rate more in line, that could save a bundle.

But as it’s not your primary residence, that may be a small drop in the ocean.

If tax laws in Irleand are similar to the UK, and as you don't have any other PPR, it should be easy to re-establish the property in Ireland as your PPR and thus avoid any CGT.

It can be as simple as spending one night in the property after the renters move out and then selling it. Your Irish accountant should be able to advise you if he's worth his salt...

Good luck.

Thank you both for your replies!

Re PPR I did rent the place out for 3 of the 7 years i have owned the place so I can only claim PPR for a certain period. However they do give you the last 12 months (in ireland and 9 months in UK) as PPR no matter what... so I will be able to claim PP$ for four years of the seven. this means I only pay circa 35-40% of the CGT due, which will be further reduced as I invested into the property to improve it. I have no issue paying taxes where they are due but I just want to both ensure i do it right and not over pay via double taxation.