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UK resident clients have sold a property in Florida. Once depreciation has been added back, a capital gains arises in respect of the sale, but unrelieved losses are brought forward from letting the property. US tax law provides that losses from passive income can be seat against a gain on the sale of the asset
Our UK resident clients sold a property in Florida for $170 000. The property cost $210 000 and the depreciation claimed on the rental property for US tax purposes was $70 000. Based on these figures the gain subject to US income tax was calculated at $30 000: $170 000 less $140 000 being the original cost less depreciation.
Rental income losses of $50 000 accrued in the years up to and including the year ended 31 December 2011 and a further loss of $10 000 arose in the year ended 31 December 2012. Total unrelieved losses are therefore $60 000.
Can readers advise whether any or all of this rental income loss could be offset against the above gain of $30 000?
Query 18 293 – Jerry
Reply from David Treitel American Tax Returns Ltd
It seems likely that Jerry’s clients are UK resident...
Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
