I am about to sell our apartment in Edinburgh prior to returning finally to the UK in June 2013. We are looking to immediately buy another slightly bigger apartment to live in. Here is the situation:
When we came to the USA in early 2004 we had a small apartment in Edinburgh which we have continued to hold. It has always been our intention to return to the UK for the later part of our lives following my assignment here. It has been rented out to some family members for some time and the income was reported here in the USA tax returns but as of 1st Nov 2012 it will be empty with all the bills being paid by us i.e. taxes, electricity, gas. When we came to the USA in Feb 2004 we bought a small town house in Fort Mill SC. We sold this townhouse on 26th June 2012 at a loss of around $16,000. I will report this in my US Tax Return for 2012. We then moved into a little rented apartment on 26th June in Fort Mill and will be there will June 2013 when we finally leave the USA and return in our Green Cards.
We would like to begin now to sell our property in Edinburgh and want to buy an apartment that will better suit our needs for the next 20 years of our lives. We want to put it on the market in January 2013. It is therefore likely that this home could sell before we return to the UK in June 2013.
Here are my questions:
1. Do we have to declare the sale of our Edinburgh apartment in our USA 2013 Tax return presuming we sell it prior to the end of June?
2. If we do have to declare it will we be taxed on any gain we make on this property?
I know we have no tax liabilities in the UK if we sell it before we come back. I have already checked on that.