I have a Canadian client who sold their Maui vacation condo and has the HARPTA/FIRPTA
tax of 22.5% withheld on their sale in escrow. It was not a rental unit just used for the family
for a vacation home. When I do the 1040 and Hawaii N-15 they have no income in
the United States thus they should pay $0 tax on the capital gain - correct?
They paid $175,000 in 2016 and sold in 2020 for $340,000 - I assume they are not
entitled to the $250,000 capital gain exemption if they lived there 2 out of the past 5 years
since it is a vacation rental. Any thoughts? Mahalo
"if they lived there 2 out of the past 5 years"
You stated they live in Canada.
"since it is a vacation rental."
You stated it is not a Rental; a vacation home used solely by them? Are you trying to treat this as a second home?
"Level Up" is a gaming function, not a real life function.