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Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3792
Experience:  20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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My parent's house in the UK was sold after their deaths and

Customer Question

My parent's house in the UK was sold after their deaths and I have a capital gains tax that I must pay on the net gain of 45,793 UK Pounds. I live in California. What amount should I pay given that my tax is 40%. Is there a CGT allowance?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.
Hi. My name is ***** ***** I will be happy to help you. It really depends. Have you inherited those? If yes, how long after you inherited it you sold it?
Customer: replied 1 year ago.
Hi Eva, I inherited with my 2 siblings an estate in the UK (I live in California). This was on January 22nd 2016 and completion was on March 30 2016. The house was sold for 515,000 UK Pounds. Date of death value was 370,000 UK Pounds. Gross gain is 145,000 UK pounds, less legal expenses = net gain 137,380 UK Pounds. Divide this by 3 (we are 3 siblings) = 45,793 UK Pounds. How do I go about paying my CGT on this in the US (my country of residence). And, how much? And, is there a CGT allowance as there is in the UK? Thanks.
Customer: replied 1 year ago.
And, is there any way I can avoid paying this tax?
Expert:  emc011075 replied 1 year ago.
How did you figured out date of death value? I have hard time to believe that in couple of month the value of the house increased by 145,000.
Expert:  emc011075 replied 1 year ago.
For US tax purposed your basis in inherited property is fair market value on date of inheritance. Usually, if you sell inherited property within 6 month you do not have any capital gains and often have a little loss because of settlement cost and RE commission.
Expert:  emc011075 replied 1 year ago.
To determine your fair market value check how much similar houses were sold for few month ago. You can also ask your agent for how much she would list the house four month ago. I can guarantee you she would not listed it for 145K less than it was sold.
Customer: replied 1 year ago.
Date of death value was about a year prior - March 2015. Fair market value was 370 K . We sold the property almost a year later for 515K (gross gain of 145K). What do I pay, if anything? Is there a GCT allowance? Thanks.
Expert:  Barbara replied 1 year ago.
Different expert here - my name is ***** ***** I will be happy to assist you further since the first expert has opted out.You will need to report your prorated portion of the sale in U.S. dollars on your U.S. tax return and pay capital gains tax on any gain. There is no CGT allowance for this type of sale in the U.S. The capital gains tax rates for 2016 can be found at the following link: let me know if I can assist you further.Thank you and best regards,Barb