Taxes 3 posts by 3 users

Posted: 02/14/2008 at 05:33AM

I am a US citizen living abroad for almost ten years now. I am planning to buy property as an investment in Chicago. My question (amoung many) is whether or not I am able to claim non resident and get a cut on the tax. Also, I would like to make a cash purchase and avoid loans and mortgages, if I bring in a substantial amount of money to my US account with verification that I have sold my property abroad, will I be taxed on that money as well.
Thank you in advance for any suggestions and help.

Posted: 03/02/2008 at 01:43PM

If you want to use proceeds from RE sale overseas to purchase property in the US, there are two separate issues involved:
1] disposing of property overseas may have tax consequences over there, depending what country you were residing at - e.g. in Poland problem for the seller doesn't exist due to the fact that all transfer taxes are paid by the buyer, and the government just recently ditched " enrichment tax" ; the only problem you may encounter in Poland is funds transfer abroad - you need to prove that it actually is proceeds from RE sale ( actually the buyer may be audited by a banking sector control body in order to confirm your statement); other countries ( even in Eastern Europe) will tax you due to " enrichment" and also - if the amount of proceeds is considerable, there may be some foreign currency transfer thresholds, so....... do due diligency in that matter before you sell and transfer

2] capital gain taxes in the US - if the property you sold overseas was your main home, you are an US citizen, and you spent at least 2 years ( incrimentarily combined) in the property during last 5 years before disposal took place, you are exempt from CG tax up to amount of $ 250 K per single and $ 500K per married couple filing jointly; if there was less than 2 years, exclusion amount is linearily prorated ( e.g. if you only stayed 6 months during 5 years before selling and you are married and you file jointly with your hubby, you are exempt up to $ 125K); now - it's all about your GAIN from sale, i.e. difference betwen selling and purchase price of the property; also - if you are exempt, you DO NOT need to file a specific schedule in form 1040(I think it's schedule D)

last but not least - in a case of IRS audit, even if you are exempt from CG on sale of your foreign home, be prepared to prove, that monies transfered to the US actally were the proceeds from the sale ( best way to do it is to have the buyer cut you a check denominated in USD, with an anno on the stub saying e.g. " payment for property located ......." )

wish you good luck with your transaction

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