UK USA Tax form SA109

[oneda]

Hi there,

I am a UK citizen who now lives in the USA.

I have a property in the UK for which I receive rental income due to which HMRC requires me to complete a tax return for non-resident landlord.

I am completing SA109 but am confused by question 15 and 16. I submit my tax return in the US for my income in the USA and rental income from UK, so would I be eligible for the personal allowance as a non-resident landlord in the UK? If so do I check both box 15 and 16?

Kind regards,

O

Box 15 If you are entitled to claim personal allowances as a non-resident because of the terms of a double taxation agreement

Box 16 If you are entitled to claim personal allowances as a non-resident on some other basis, or as a dual resident remittance basis user under the terms of certain double taxation agreements

[darthblingbling]

Box 16, you get it as you are an EU citizen. Not under any DTA

[DavidTreitel]

From a UK perspective the entitlement to the personal allowance is automatic because of your British citizenship. From a US perspective you'll want to pay any UK tax no later than 31 December each year. In the US the rental activity will be reported on Schedule E plus Forms and 1116. Deprecation will need to be calculated and claimed as an expense each year.

[maths]

An entitlement to a UK personal allowance arises under ITA 2007 s 56(3) ie you are a national of an EEA state, namely, the UK.

The UK/USA double tax agreement does not extend personal allowances to USA citizens (non-UK resident).

[oneda]

Thanks for the information.

I was not aware that you had to deprecate the UK rental property. I can see it getting complicated when I sell the property or if I pay capital gains in the UK at the time of sale it would mean I would not have to in the US or does it complicate the matter as I depreciated the property in US tax filing?

[maths]

On sale any UK capital gains tax is computed in £ and on UK principles/rules.

Any US capital gains tax is computed on US principles in $.

There is invariably a mis-match between the two resultant amounts.

For UK income tax purposes in calculating any rental profit for a tax year, "depreciation" is not deductible.

[oneda]

On sale any UK capital gains tax is computed in £ and on UK principles/rules.

Any US capital gains tax is computed on US principles in $.

There is invariably a mis-match between the two resultant amounts.

For UK income tax purposes in calculating any rental profit for a tax year, "depreciation" is not deductible.

Sorry a little confused - so I don’t have to calculate the depreciation in the US?

[DavidTreitel]

Thanks for the information.

I was not aware that you had to deprecate the UK rental property. I can see it getting complicated when I sell the property or if I pay capital gains in the UK at the time of sale it would mean I would not have to in the US or does it complicate the matter as I depreciated the property in US tax filing?

If depreciation has been overlooked, it is claimed as a Section 481(a) adjustment on Schedule E in the year that IRS Form 3115 is filed to correct the oversight. When the property is sold, US law requires one to recapture depreciation that would have been "allowable" even if it was never claimed.