# Mortgage Capital Gains Tax



## bsaw (Oct 5, 2015)

I have filed returns for many years. I moved here in the mid-70s, married a Brit and he died a few years ago. We bought a house in 1991 and I’ve recently sold it. I paid a sizeable capital gains tax but didn’t know that I should have filed for the capital gains on the interest only mortgage when I paid it back. Will the IRS come after me for non filing?


----------



## Bevdeforges (Nov 16, 2007)

It depends on a variety of factors. First of all, as a US citizen, you are supposed to have been filing US taxes all these years (at least if your worldwide income exceeded the filing threshold level). But on the sale of a house used as your personal residence, up to $500,000 of capital gain is exempted from US taxes (if married, filing jointly) or $250,000 for a single or married, filing separately return.

OTOH, the IRS isn't really likely to come after you unless the amounts involved are well over the $500,000 mark. 
Cheers,
Bev


----------



## bsaw (Oct 5, 2015)

I have already paid a capital gains tax but never reported the gain when I redeemed my mortgage. I have since read about phantom capital gains and don’t know whether I should have reported it and whether the IRS will pursue me. I am a UK resident, have been filing in the US for years. The mortgage was in both my husband’s name and mine and he died one year before I sold the house. I am retired; my husband was the earner. I have since moved into a smaller house and have no intention of moving back to the States. What is the likelihood of the IRS considering a penalty, and did I even need to file this phantom tax? Should I own up before a penalty is made?


----------



## Bevdeforges (Nov 16, 2007)

As I said before, it really depends on the magnitude of the capital gain. If it's under $500,000 there is little to no chance that the IRS will ever know of it, and even if they did, you'd be well within your rights to say that you just "assumed" you fell under the threshold for having to report it.

Seriously, the IRS has little or no means of finding out what income or revenues you have other than the US based system of 1099s and W2s and such. They only caught up with Boris Johnson because he's kind of "famous" and so when he sold his home for several million pounds/dollars it was all over the papers. (Plus "everyone" was well aware that he was an "accidental" American.)

In your case I wouldn't worry unless you're in multi-million dollar territory.
Cheers,
Bev


----------

