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Topic: Dual taxation for inherited assets and US gains  (Read 433 times)

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Dual taxation for inherited assets and US gains
« on: May 05, 2018, 02:46:15 PM »
What tax will I pay for inheriting money in the USA this tax year?

Also inherited a US property and will sell this year.  My stepped up basis in the house will be  $70,000 USD

I am UK resident, dual national


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Re: Dual taxation for inherited assets and US gains
« Reply #1 on: May 05, 2018, 09:31:53 PM »
What tax will I pay for inheriting money in the USA this tax year?

Also inherited a US property and will sell this year.  My stepped up basis in the house will be  $70,000 USD

I am UK resident, dual national

I think you will not owe any tax on what you inherit in the USA. Any taxes due will be paid by the estate before you receive any any money.

I will leave others to comment on the capital gains taxes after you sell the house.
Dual USC/UKC living in the UK since May 2016


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Re: Dual taxation for inherited assets and US gains
« Reply #2 on: May 06, 2018, 09:21:22 AM »
Based on my current (similar) situation, the only tax you would potentially owe in the US would be on capital gains (if any) on the sale of the house.

My brother and I inherited my father's estate in 2017. There were no estate taxes due as NC abolished the estate tax in 2014 or thereabouts and the value of the estate was WAY too low to attract federal estate tax.

We were advised that our only personal tax liability would be if the house sold for more than the value listed on the forms that were filled with the county, which in NC must equal the tax value. In our case, the sales price BEFORE the RE commission and other costs of sale is slightly less than the 2017 tax value. So, no capital gains or other tax to pay on the proceeds of the sale.


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Re: Dual taxation for inherited assets and US gains
« Reply #3 on: May 06, 2018, 02:46:22 PM »
Thanks

I think the stepped up basis of the house for capital gains purposes is $100,000.  But I co-own it with my sister so that means $50,000.

Where do I pay the capital gains tax?  On next years tax return? In the UK or the USA?

I was actually going to stay in the USA for the 2018/2019 UK tax year as I left the UK April 7th to start a job in the USA but it didnt work out and I just want to go back to the UK. But not if its going to cause financial havoc for me!

What am I best off doing? 


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Re: Dual taxation for inherited assets and US gains
« Reply #4 on: May 06, 2018, 05:03:55 PM »
You won't own any capital gains on the house until you sell it. (I don't know how to accurately calculate the capital gains when you do come to sell it).
Dual USC/UKC living in the UK since May 2016


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Re: Dual taxation for inherited assets and US gains
« Reply #5 on: May 06, 2018, 06:45:35 PM »
Yes I know that.  I am selling my share to my sister in the next few months.


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Re: Dual taxation for inherited assets and US gains
« Reply #6 on: May 06, 2018, 07:58:41 PM »
Yes I know that.  I am selling my share to my sister in the next few months.

Since you will almost certainly not be tax resident in the UK when you sell then whoever does your US taxes should handle it. If you use tax software to do your US taxes then it should prompt you through the process.
Dual USC/UKC living in the UK since May 2016


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Re: Dual taxation for inherited assets and US gains
« Reply #7 on: May 06, 2018, 08:30:57 PM »
Im not worried about US tax return I am asking to see if I have to file 2018/2019 tax return in UK and report it there


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Re: Dual taxation for inherited assets and US gains
« Reply #8 on: May 06, 2018, 09:24:39 PM »
Im not worried about US tax return I am asking to see if I have to file 2018/2019 tax return in UK and report it there

This document is fairly clear on how to determine that.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/547118/160803_RDR3_August2016_v2_0final_078500.pdf#page40



Dual USC/UKC living in the UK since May 2016


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Re: Dual taxation for inherited assets and US gains
« Reply #9 on: May 07, 2018, 12:02:13 AM »
LOL that document is far from clear!!! Why does the government make everything so complicated??!?!?!?!?!?! 


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Re: Dual taxation for inherited assets and US gains
« Reply #10 on: May 07, 2018, 08:18:36 AM »
LOL that document is far from clear!!! Why does the government make everything so complicated??!?!?!?!?!?!

That’s government for you. If you think you understand something then you have probably misunderstood the document.

Dual USC/UKC living in the UK since May 2016


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