# UK USA Taxes



## onedah (Aug 5, 2020)

Hi,

I live in the USA and have file taxes in the UK and USA, I just completed my UK taxes for 2019 - I have a rental property and the income was under the UK allowance so owe nothing to HMRC. 

Question: when I complete my US taxes would I still need to declare the income from the property in US? If Yes - sounds like you end up paying tax anyone in 1 or the other country?

Thanks


----------



## Moulard (Feb 3, 2017)

Assuming that you are a tax resident of the US (highly likely given the fact you state you like in the US) then you must report and pay tax on your global income to the IRS - including you UK rental income.

The UK will have the primary taxing right on income from UK real property. 

The tax treaty would allow you to claim a tax credit for UK taxes paid or accrued.

But... given you owed no UK tax on the income, then there is nothing to claim on your US return...

So you will end up paying the US tax rate on that income to the US.

If, hypothetically, you paid the equivalent of $200 USD in UK taxes and owed $300 USD in US taxes on it, you would be able to claim a tax credit for the $200 you paid to the UK, and thus only have to pay $100 to the US..

If the numbers were the other way round, you would pay $300 to the UK, claim a credit for $300 in the US, and be able to carryover the extra $100 to offset future tax liability of foreign income.

I am not familiar with the vagaries of the US-UK tax treaty, so this is a general comment that aligns with the model treaty.. you may wish to read the US-UK treaty and any technical memorandum (the easier for a human to read interpretation). It is always possible that the two countries negotiated a different arrangement for income from real property.


----------



## johnalcera (Aug 19, 2020)

The UK will have the primary taxing right on income from UK real property.


----------

