US citizen who leaves abroad sold his property and would like to qualify under topic 523 'Selling your home'.
- The individual did not reside in this property since according to him 'it was too small for his 7 person family'.
- That's the only property this individual had prior to the sale. He rented another house for his family.
- The individual used the consideration to buy another house which he currently resides in.
- There is no taxes in the country which the property is located. The sale is fully exempt.
My first reaction would be that this transaction does not qualify for gain exclusion from home selling.
I would like to hear from you what do you think.
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Unless s/he - he - they had quintuplets that "made the house too small" ... I vote with no exclusion.
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Sometimes my curiosity gets the best of me. If he didn't reside in the house, what was the house used for while he owned it?
Valid point. Haven't gotten there. I know that part of the property was paid by taking a loan from the wife's brother but I do need to verify that there was no mortgage/other loan from the bank.
Honestly, I don't think he will remain my client after he will find out that he needs to pay taxes in the US. I believe I prefer that.
Thanks all for the inputs.
Absolutely, that was reported in PY. That's less harsh since it is taxable in the origin country and from 1116 is applicable. Since the sale of home in the origin country is exempted income it would be fully taxed (LT capital gain) in the US.
Thanks for the heads up
...That's less harsh since it is taxable in the origin country and from 2555/1116 is applicable...
You probably didn't mean it but this has nothing to do with F.2555.
Still an AllStar