Before any discussion of whether you owe tax on the sale of the UK home-----You mention that when you sold the home you owned in the US you "transferred the proceeds to buy a UK property." Did you receive a 1099S for the sale of that US home and enter it on your tax return back in 2000? The law that said you could avoid paying capital gains tax on the gain from selling a home changed in 1997---so in tax year 2000 you were subject to that tax law. What you did with the gain from the sale of your home in 2000 was irrelevant. Purchasing a home in the UK with the proceeds of the US home was irrelevant.
Since tax year 1998----
SALE OF HOUSE
If your gain was more than $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return. Whether you re-invested the gain in to another house is irrelevant. If you have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)
If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
