US & UK Property Tax paid to the IRS & HMRC
August 4, 2021
UK Property Tax
UK property tax is paid on the profits made on your buy-to-let property investments. There are two types of taxes that you need to consider.
The first property tax is for personal self-assessment tax returns. This is whereby properties are owned in your name. There is also a separate tax return required for property investment companies. Company shareholders and directors must file their property investment company accounts to Companies House and a tax return to HMRC.
It is essential to be tax efficient when it comes to property tax. It does not matter how you own buy-to-let properties, but you want to be tax efficient.
Property investors/landlords need to consider other forms of tax. Stamp Duty Land Tax (SDLT) is a tax paid when purchasing a buy-to-let property. Income tax or corporation tax is paid on the profits made on the buy-to-let property investment portfolio. Capital Gains Tax (CGT) is the tax paid on the profit made when selling/disposing of a property. Inheritance Tax (IHT) is paid on the death of the landlords/property investor.
US real estate property tax
Americans who own US or foreign real estate property must declare their rental income to the IRS each tax year on a 1040 tax return. Income tax is charged on the profits made in the US or foreign-based real estate property. British and other foreigners that own American real estate property will also need to declare the income earned in the US and in the country they reside. Expats must also submit their rental income, costs and profits to the IRS and pay taxes on their 1040 submission.
One of the key differences is depreciation. It is possible to benefit from a depreciation charge on real estate property on a 1040 tax return that is paid to the IRS.
Optimise Accountants provides tax support to landlords/property investors to help grow their wealth and minimise tax: income tax, capita; gains tax (CGT), inheritance tax (IHT), corporation tax and Stamp Duty Land Tax (SDLT). Optimise also helps expats understand taxes in the United States, United Kingdom, Spain and Hong Kong
www.optimiseaccountants.co.uk
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