Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Me and my wife moved to the USA about 12 years ago. We sold

our UK home property a...
Me and my wife moved to the USA about 12 years ago. We sold our UK home property a couple of years after moving and bought another UK property with the proceeds also in the UK. We have never lived in that property but have rented it out on and off since then. The income is not enough to incur UK taxes and since it was not bought with money earned in the USA so we didn't realized we might need to declare it in the US.
Im now reading about new rules that the IRS wants to know about assets held in other countries. Should I be declaring this property and will I be taxed in any way on its value or its purchase 9 years ago? Im also wondering if I might have back taxes due on the rental income from it? Is that right and if so how many years back would I need to report?
Show More
Show Less
Ask Your Own Tax Question
Answered in 39 minutes by:
4/1/2012
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,163
Experience: Taxes, Immigration, Labor Relations
Verified
Hi and welcome to Just Answer!
Several issues...
1. Reporting requirements...
As US residents - you are required to report on your tax return all your worldwide income - regardless it is earned in the US or abroad and regardless if you keep the money abroad of transferred them to the US.
2.
You do not need to report the fact of having a property in the US. Reporting requirements are only for financial accounts.

you should report a foreign account by

-- completing boxes 7a and 7b on Form 1040 Schedule B - http://www.irs.gov/pub/irs-pdf/f1040sb.pdf .

-- you are a subject of FBAR reporting if a foreign account value is above $10,000. The form to use is TD F 90-22.1 - this form is mailed separately. There is no tax associated with these reporting.

3.

In additional - you need to file form 8938 - because your amount is more than $50,000 www.irs.gov/pub/irs-pdf/f8938.pdf - that form is attached to your tax return.

The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.

Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season.

4.
You need to report your rental income and corresponding rental expenses on your tax return every year. You will use schedule E - www.irs.gov/pub/irs-pdf/f1040se.pdf
Here are instructions - www.irs.gov/pub/irs-pdf/i1040se.pdf
Only your NET rental income is added to your other taxable income.
5.
The sale transaction of your rental property is reported on form 4797 - www.irs.gov/pub/irs-pdf/f4797.pdf .
part of your gain attributable to depreciation recapture will be taxable as your ordinary income - the maximum tax rate is 25%.
The rest of the gain will be classified as long term - taxable at reduced rate - not more than 15%

Let me know if you need help with reporting.
Ask Your Own Tax Question
Customer reply replied 5 years ago
Some clarification please.

You say in #2 that I do not need to report the presence of a property to the IRS.
But you also say #3 I need to file form 8938 because 'your amount is more than $50,000'.
What amount are you talking about? do you mean a financial bank account? Because our UK account has less than $10,000 in it or do you mean because the property is worth more than $50,000 in which case that seems to contradict #2.
Also do I have to declare my rental income for previous years and if so how would I go about doing that.

thanks! -N
You say in #2 that I do not need to report the presence of a property to the IRS.
But you also say #3 I need to file form 8938 because 'your amount is more than $50,000'.
What amount are you talking about? do you mean a financial bank account? Because our UK account has less than $10,000 in it or do you mean because the property is worth more than $50,000 in which case that seems to contradict #2
.
I do not see any contradictions...
Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season.
Real estate properties are not financial assets and you do not report the fact of having a rental property on that form.

Also do I have to declare my rental income for previous years and if so how would I go about doing that.
Under the US tax law - you are required to report your rental income every year since you became an US resident. There is no such provision which allows you not to report your income just because it was many years ago.
However from the practical point - please be aware that there is a statute of limitation for the IRS to assess additional tax liability - which is generally three years.
The statute of limitation is six years if omitted income is 25% of your reported income. And there is no statute of limitation if the tax return was not filled or in case of fraud.

Let me know if you need any help.
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,163
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 5 years ago
Thank you - so the real estate property does not constitute a financial asset. I understand.
The only thing Im still a little unclear on is when you stated:

In additional - you need to file form 8938 - because your amount is more than $50,000 www.irs.gov/pub/irs-pdf/f8938.pdf - that form is attached to your tax return.

Since I do not have any financial accounts with a total value more than $50,000 I assume I do not need to fill out 8938 - correct?
That is correct - no need to use form 8938.
As I mentioned above - form 8938 was introduced starting 2011 tax year as a result of the Foreign Account Tax Compliance Act (FATCA).

Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS.

Ask Your Own Tax Question
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,163
30,163 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Can I report rental income in my tax return on a property
Can I report rental income in my tax return on a property thar is owned by my father? He does not live in the US is not a US citizen and can sign a document to allow me to receive the rental… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
How to report cancellation of debt on rental property?
I received a 1099-C for my rental property that I held for over 1 year. According to the worksheet provided in IRS Publication 4681 I was insolvent just prior to the debt being canceled. My question i… read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
My question is about depreciation for rental property. My
Hello. My question is about depreciation for rental property. My rental property had no income during one year. In this case, since there was no income, I do not need to claim depreciation for that sa… read more
Fred Rook
Fred Rook
Corporate Controller
BSBA
32 satisfied customers
Under current law a 100,000 taxable income pays $10,365 plus
Under current law a 100,000 taxable income pays $10,365 plus 25% of the amount exceeding $79,400 i.e. about $16,000. Under tax reform will the tax be $25,000? … read more
Lev
Lev
Tax Advisor
30,163 satisfied customers
Is the sale of customer list a capital gain or ordinary income?
Is the sale of self-created intangibles, such customer lists, digital files, web sites, etc subject to capital gain or ordinary income treatment?… read more
Lev
Lev
Tax Advisor
30,163 satisfied customers
I got a 1099 A of a rental property with information on Box
I got a 1099 A of a rental property with information on Box 2 and Box 4 how do I report it on my tax… read more
Lev
Lev
Tax Advisor
30,163 satisfied customers
Would owning a second home that is used for rental property
Would owning a second home that is used for rental property income affect VA survivors benefits? Would SSDI income?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,490 satisfied customers
Are you familiar with Capital Gain taxes on rental property?
Are you familiar with Capital Gain taxes on rental property? … read more
Lev
Lev
Tax Advisor
30,163 satisfied customers
I have a schedule e form that I filed for extension (2016).
I have a schedule e form that I filed for extension (2016) . I attempted to send in time online but was thwarted by my own incompetence to follow directions basically. I saw that if I used a free form… read more
Lev
Lev
Tax Advisor
30,163 satisfied customers
I have a question regarding the ordinary income tax. If the
Hello, I have a question regarding the ordinary income tax. If the ordinary income tax due is negative does that apply anywhere? This pertains to the sale of an S corp .business. … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
If my Schedule E loss is disallowed for a rental property
If my Schedule E loss is disallowed for a rental property (due to income level), can I take the mortgage interest and real estate taxes paid on Schedule A instead of on Schedule E?The entire expense a… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
736 satisfied customers
What tax form is filed to report dividends paid by US Corp?
What tax form is filed to report dividends paid by a US Corp which is owned by a Canadian Corp? I think it might be 1042S. I want to know the rate of WH.… read more
abci168
abci168
Principal
27 satisfied customers
Is there a statute of limitation for sales tax in ohio?
Is there a statute of limitation for sales tax in ohio? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,490 satisfied customers
I didn't claim depreciation on a rental property for 8
I didn't claim depreciation on a rental property for 8 years. I'm about to sell the property. How many years of the past annual depreciation can I claim? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I sold a rental property and fully depreciated furniture and
I sold a rental property and fully depreciated furniture and fixtures such as refrigerator/oven/doors etc. Would I have to recapture the FF&E depreciated amounts as ordinary income with the sale when … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,230 satisfied customers
Form 8938, individual taxpayer has CFC. It is above
Form 8938, individual taxpayer has CFC. It is above threshold for Form 8938, so reporting on 8928 that CFC is reported on Form 5471. However, CFC has financial deposit accounts that taxpayer has signa… read more
Matthew Breecher
Matthew Breecher
President
MBA (Graduate Legal Studies)
285 satisfied customers
How are canadian pensions reported on us form 1040. the
how are canadian pensions reported on us form 1040. the amounts on the pension form in canadian dollars or us dollors when mailed to a canad***** *****ving in us.… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Form 1040 line #44 what taxes--federal income tax + social
form 1040 line #44 what taxes--federal income tax + social security +medicare tax, all or just federal? … read more
Lev
Lev
Tax Advisor
30,163 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x