# Question on Capital Gain Tax in US Tax-return when selling rental property in the UK



## manny.j (Dec 4, 2011)

Hello,
I am a dual-US/UK citizen. We are considering selling our *rental property* in the UK, which should result in a profit of around £30K.

If we are paying Capital Gain Tax (CGT) in the UK for this sale, would be also be obligated to pay CGT also in the USA? If yes, then I presume there is no way to avoid being double-taxed both in the UK and USA for CGT.

Kindly advise, and thanks for your help.


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## Bevdeforges (Nov 16, 2007)

Basically, you pay the capital gains tax in the UK - and then you use form 1116 to claim the Foreign Tax Credit for the tax you paid (on the capital gain) in the UK against whatever the tax is for the sale in the US.


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## Moulard (Feb 3, 2017)

The gotcha is that for for your US tax return your functional currency is the USD so you will need to determine the gain in USD using currency exchange rates at time of purchase vs time of sale.

Its entirely possible to buy a property for £100K and sell it for £100K and yet still have a capital gain in the eyes of the IRS due to currency fluctuation.


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