How to report UK home sale

Hi all,
I have sold my uk house (Feb 21) as I'm now living in an inherited home. Firstly,  do I report the gain on the old house (it's under the threshold) - and if not, if I sell the new house within 2 years will I still be able to claim the exclusion?
I'm probably not making sense but hopefully someone will understand my gabbling!!!
Sharmac

Where do you live, US or UK?

 Is the inherited house in the same country as the house you were living in and now sold?

How long were you living in the house before you sold it and did you rent it out after moving into the inherited house and before selling it?

Hi - OK - I live in the UK and both houses are here. I lived in the sold house for 15 years and sold it when I moved to the new one. It was never rented out.
Hope this helps?

Hi - OK - I live in the UK and both houses are here. I lived in the sold house for 15 years and sold it when I moved to the new one. It was never rented out.
Hope this helps?

It doesn’t sound like you have anything to report in either the US or UK but I don’t have personal experience.

Oh OK - thanks. The old house sold in Feb 21 - so do I need to wait 2 years before selling the new one to avoid tax? I actually declared the new one as my home on the 2020 US tax return.

Oh OK - thanks. The old house sold in Feb 21 - so do I need to wait 2 years before selling the new one to avoid tax? I actually declared the new one as my home on the 2020 US tax return.

For sure, if you were living in the USA then the 2 year rule applies.

https://www.investopedia.com/ask/answers/06/capitalgainhomesale.asp

I’m not certain whether or not buying and selling your primary home in the UK while living in the UK  is covered by the UK/US tax treaty but maybe someone will come along.

Article 13 covers capital gains but doesn’t mention primary residence

https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/uktreaty.pdf

Don't forget to file a 3520 for the inheritance.

I’m not certain whether or not buying and selling your primary home in the UK while living in the UK  is covered by the UK/US tax treaty but maybe someone will come along.

Interesting topic, this.  I've been thinking about a related issue recently.

I'm a USC living in my current house for 20+ years; jointly owning with my UKC wife.  The value has increased [the house that is; my wife is priceless ] by nearly 3x during that time and were we to sell it the captical gains on my half would exceed the exclusion of $250k.

The link below describes a scenario wherein if you change ownership from joint tenents to tenants in common, the USC can reduce their holding to (or below) the $250k threshold to remove captial gains liability.
https://www.buzzacott.co.uk/insights/stepping-stones-what-americans-need-to-know-about-owning-uk-property

It's been in the back of my mind to do something like this, but maybe in stages over a few years so that I don't fall foul of the gift allowance but then don't have any captical gains tax to pay should we ever sell, say to downsize.

The estate of the deceased is reported on Form 8938 (this is often missed). Distribution of the property from the Estate is reported on Form 3520. Have both of these been filed with the IRS?

Um, the deceased was UK filer only, so would it just be my share of the estate I report?

Um, the deceased was UK filer only, so would it just be my share of the estate I report?

your share of the Estate is a specified foreign financial asset from the moment of death until the estate is closed. The distribution(w) is the money you get for Form 3520.

Would you not have to wait until probate is complete? It’s not your financial asset until distributed from the residual estate and all disbursements made.

The estate of the deceased is reported on Form 8938 (this is often missed).

An interest in an estate would not be a specified foreign financial asset. Therefore, it would not be reported on Form 8938.

An interest in an estate would not be a specified foreign financial asset. Therefore, it would not be reported on Form 8938.

this view might be in line with the law, but is directly opposite to the official IRS instructions. Please refer to page 7 here: https://www.irs.gov/pub/irs-pdf/i8938.pdf

Because the house was in the UK and sold after April 2020, you may want to double check you filed the compulsory UK CGT return with HMRC within 60 days of sale: https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax