US property income

US property income

Didn't find your answer?

Could someone help me?

I have property rental income in the US. This time for 2014 is less than 2500pounds, but in future maybe a little bit more than that. 

So I am wondering which country's tax I should pay?

Thank you in advance.

Replies (5)

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ghm
By TaxTeddy
21st Jan 2015 11:21

Possibly both

The answer to this will depend on your tax residence status, your domicile and (in the US) your citizenship.

As far as the UK is concerned, if you are a UK tax resident then you are taxable here on your worldwide income which would of course include the US rents. However, if you are not domiciled in the UK then you may possibly exclude this income from UK taxation by using the remittance basis as long as the money has not been brought UK.

As far as the US is concerned, my understanding is that you will of course pay local taxes (our equivalent to property rates) and you may pay state taxes too. Whether you pay federal taxes will, I believe, depend upon whether you are a US citizen or not. To be sure you would need to speak to a US tax expert.

If you do pay state or federal taxes in the US and you are still liable to pay tax in the UK, as described above then you would normally be able to obtain a credit for the US tax paid.

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By redandblue
21st Jan 2015 13:17

I am a UK citizen. Heard there is a treaty between UK and US.

Dear Sir, Thank you very much for your answer.

I am a UK citizen, but I spend most of the year living overseas, (not in US) and I do not work in  the UK. So I do no have any income in the UK.

Reading your answer, If I have no intention to leave UK completely, then I am considered domicil in the UK, so I should pay both UK tax and US tax for the rental income?

An US accountant told me that there is a treaty between UK and US, which allow me to pay tax in only one of the two countries. so if I pay the US tax, I should not need to pay UK tax and vice versa.  

I am confused. US tax only? or US + UK tax? or UK tax only? Which one?

And if I do decide to pay tax in the UK, what should I do? Is the PAYE thing cover my case?

Thanks again.

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By David Treitel
21st Jan 2015 21:33

The US accountant who advised you sounds confused. As this is income from US real property you will need to apply for and obtain an ITIN, decide if you wish to claim the "net election" and file annual US income tax returns.

Other countries such as the UK might give you credit for US tax payable.

I suggest you take professional advice.

 

 

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By redandblue
21st Jan 2015 22:38

Yes,I will apply for the ITIN.

In order to apply for  ITIN, I need a US tax return. So the accountant has done a tax reture, and he said once I got the ITIN he will do adjustment to the tax reture. 

But I want to know once the tax return is adjusted,  am I all done with the tax? Or there are whole lot to do for the UK tax, like report the tax and then claim back etc.? What are the procedures?

Thank you in advance..

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By ruthp
22nd Jan 2015 08:43

US/UK advisors


You need specialist US/UK advice here - try westletondrake.com

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