Out of country - paid no tax on UK property & sale.

[soodnim]

Have been in the US since July 1996 and rented my property for nearly eight of these nine years. Have filed no UK tax returns since this time on rental income and am just about to sell property with a capital gain of 85K pounds since purchase in early 90's. Could you advise, (1) do I have to pay any tax on the property at sale in the UK, or do I/should I declare this in the US when I transfer the money (my permanent residence is US with no UK return likely); (2)should I file UK tax return for each year; (3) are former tenants liable for tax on the property for the time they rented?; (4) if paying tax in the UK on these nine years, am I eligible for any tax relief in the US?

Appreciated.

[tax me less!]

As a US resident you have presumably been declaring the rental income and expenses on your annual US tax returns.

You will of course also be subject to US capital gains tax on the gain (at Federal and State levels) plus a special 25% rate to recapture depreciation allowable since 1996.

I am not clear why no UK tax returns were filed. Did you register under the non-resident landlords scheme? If not did your tenants withhold basic rate UK tax before paying the rent to you? Was there a rental profit each year?

[soodnim]

Have not declared rental income & expense in US - thought I'd only have to do that in the UK when getting tax up-to-date.

Had thoguht my father had completed tax returns on my behalf prior to his death, but nothing, so I need to attend to this immediately for all years.

Tenants witheld nothing before paying tax to me.

Rental profit of about 2,200 pounds per year bar three years at loss of 1,000 pounds/year.

Thanks.

[tax me less!]

You potentially may owe no UK tax assuming you are a citizen of a Commonwealth country and had no other UK source income. I would recommend that you file the missing UK tax returns for every year that has been missed.

In the US you may well find that once losses and depreciation are taken into account that you have missed out on US tax refunds to which you were entitled. Even though it is too late to claim US refunds it is not too late to pay any US taxes you may owe for the profitable years; so I'd go back and amend all of the US tax returns to establish your overall US tax position.

If you owe UK or US taxes then interest and penalties in both countries will be based on tax due. I recommend that you use the same accountant to prepare both sets of returns so that the global positions are consistent.

I don't know where your father comes into to a equation (eg whether you need to file a US gift tax return if he made you gifts or you inherited money from him), but don't forget that forms TDF90-22.1 may be due for every year as well if you had foreign bank accounts with the equivalent of $10,000 in them...