One property, two tax returns, three ways to get it wrong.
Rental income is reported to both authorities on rules that disagree about almost everything — depreciation, interest, repairs — and the eventual sale adds a currency calculation that surprises nearly everyone.
Two computations for the same rent
The IRS requires depreciation; HMRC forbids it. UK mortgage interest relief is capped; the US allows it against rental income. The same year's letting produces two different profits, and the foreign tax credit has to bridge them correctly.
- Schedule E and UK property pages, both prepared here
- Non-resident landlord scheme registration
- Depreciation records the eventual sale will need
- Credit relief so the rent isn't taxed twice
The sale is where currency bites
A dollar-measured gain on a sterling property, depreciation recapture, UK 60-day reporting and principal-residence reliefs that overlap imperfectly. Selling well is a planning exercise — ideally started before the listing, not after completion.
What we typically handle for you
- Schedule E and UK property pages from one set of records
- Depreciation records the sale will need
- Interest relief differences reconciled
- Non-resident landlord scheme registration
- 60-day CGT return when you sell
- Currency gain analysis on sale and mortgage
- Main-home relief planning before listing
- Credit routing so rent isn't taxed twice
The services that usually apply
Questions we get about this
Yes - it is required rather than optional, over a fixed life, and it reduces reportable profit each year.
Because it is required, not having claimed it does not avoid the recapture charge when you sell.
The two systems diverge here. UK relief on residential mortgage interest is restricted to a basic-rate credit, while the US treats it differently again.
It is one of the main reasons the profit figures rarely match between the two returns.
It changes the UK position and introduces US controlled foreign company reporting, and possibly current taxation of the profits.
Incorporating for UK reasons alone is a common route into an unexpected US filing burden.
Yes, as a US person you report worldwide rental income, with UK tax paid generally available as a credit.
The two systems calculate the profit differently, notably on mortgage interest and depreciation, so the figures rarely match.
The US requires you to depreciate rental property over a fixed life, which reduces annual profit but is recaptured as taxable income when you sell.
Because it is required rather than optional, not claiming it does not avoid the recapture later.
Both authorities calculate a gain, in different currencies, with different reliefs and different treatment of any mortgage.
The UK also requires a property return within 60 days of completion, which is a short window if it is not anticipated.
Last reviewed . Thresholds and rates change annually — check figures against the current tax year before relying on them.
Letting or selling property across borders?
Two profit calculations, two sets of relief and a 60-day UK clock on sales. We will handle both.