UK landlord

Well I rent out my house in the UK, I live in the US.  I filed out a form 18 months ago with the Inland Revenue which allowed my renters not to have to withhold taxes when they deposited the rent every month.  The Inland Revenue stated 18 months ago they would forward me a tax assessment.  I have not lived at home on a regular basis since 1967, in those days you had a tax code, and that what it.  Now the system is very similar to the US system.  I need to know how long does it take the Inland Revenue to come up with a tax assessment.  I know UK tax year is from April to April.  Would it be difficult for me to file myself, if so what forms do I use.  I looked at these UK filing people.  One quoted me two hundred and fifty pounds for a quote" simple filing. He is quite mad. 

I don't know what was quite mad here...

Anyhow, from a UK perspective you need to file a UK tax return each year.  The return is due with HMRC by 31 January.

Your US return will of course include the rental income and expenses too.  There are subtle differences in that the UK will give you wear & tear allowance and insists on a mandatory accrual basis of accounting and the US instead insists that you claim depreciation allowance on the property and lets you use a cash basis which is usually similar.

Of course you can claim mortgage interest in both places, except in the US any losses may be disallowed by the passive activity loss rules plus you may well be subject to taxes on foreign currency mortgage gains.

By renting the place out you are forgoing the $250.000/$500,000 capital gains exclusion so this may not be a wise financial move.

IMHO dealing with taxes on both sides of the pond is pretty complex, £250 for a dual qualified adviser sounds quite reasonable.

What is this about 250.000 capitol gain, thing.  I do not have a mortgage on this house.  As regards filing taxes, I get mine free in the US through either the Senior Citizens Center on the VITA programme.  This are retired Certified Public Accountants that work on a volunteer basis for people.  They also efile for a person.  I can also use the United State Military.  They provide taxes services free for dependents and widows, I am a widow.  So free, to me is free.  I am interested in the capitol gain thing.  Well any way I have had to get an MP involved at home.  I have no Non-Resident Self Assessment I have no tax return forms and no PAYE number.  It a mess.  I emailed, they were suppose to reply within five days.  I phoned them, they were suppose to reply with in five days.  Now I contacted an MP, and he is getting an Ombudsman involved.  They can this through some Parlimentary thing.  I am 100% disabled.  The only one who has helped is the MP's office.  I knew about increase and decrease on property valued, also business expenses.  My house is paid for so does that make any difference.

OK - I think I have a much better picture!

1. The UK expects you to file tax returns each year reporting rental income and expenses (plus any other UK source income such as pensions paid from the UK or UK bank interest).  If you cannot handle the calculations then the going rate for a qualified accountant in the UK probably is around £250 plus, although the Revenue will help you for free if you need assistance.

2. As a US resident your US tax returns MUST report worldwide income and gains, including rent from the UK property.  You'd need to report this on Schedule E, complete form 1116 to claim foreign tax credits (and form TDF90-22.1 if your UK bank balance was ever as much as $10,000).

3. If you sell the UK house you'll pay US capital gains tax at up to 15% plus 25% on depreciation allowable on the building during the time it has been rented.

4. I don't know if your US free tax returns have reported the UK rental income and expenses, but if this has been overlooked then you should try to get these amended.

3. If you sell the UK house you'll pay US capital gains tax at up to 15% plus 25% on depreciation allowable on the building during the time it has been rented.

Ok, sorry if this is coming off sounding a bit "off" but since I don't know anything about complex tax situations, my question is why does the US have a right to tax you up to 15% on the sale (any capital gains realized) of a house in the UK? Is this just a "paper exercise" similar to those of us working/living here who are required to fill out a tax return every year?

If that is truly the case then does it make sense for the married UK/US couple to put only the UK person's name on the house in order to possibly avoid paying a CG tax if the property is sold?
 
Just inquiring because it is certainly something to know about for the future.

A lot of people do put the house just in the UK person's name for that very reason.  You must be careful not to trigger any gift tax obligations as a result.  If you are exposed to a lot of tax, you may very well prefer to pay the gent £250 rather than the IRS 15%.

my question is why does the US have a right to tax you up to 15% on the sale (any capital gains realized) of a house in the UK?

Ha!  good question!
i dont believe the US should have any right to know anything about what we do over here.
fckin nosy greedy bstards.