Many Americans own property overseas. Sometimes, this
property acts as a second home. Other times, it’s just a temporary home before
returning to the United States.
Whatever the case may be, if you ever sell this property,
you may wonder whether or not you’re required to report the sale. The short
answer is that yes, you are. If you’re an American citizen, all of your income
is taxed, even if you earn it overseas. However, there are a few special exceptions
to be aware of.
Was The Property Your Principal Residence?
The first thing to determine is whether or not the property
was your principal residence. In other words, did you live in and own the home
for at least 24 out of the past 60 months?
If the answer to that question is yes, then you can exclude
$250,000 of capital gains from the sale of the home. This exclusion is even
higher for married couples filing jointly, who can exclude up to $500,000 of
capital gains.
What Happens When You Go Over the Exclusion?
If you earn more on the sale of a primary residence property
than the exclusion allowed, that extra money will be taxed as a long-term or
short-term capital gain. You’ll only qualify for the long-term category if you
owned the property for more than a year, in which case your profits will be
taxed at a lower rate.
Understanding how to handle your taxes after selling your
home, especially when the selling takes place overseas, can be confusing. If
you run into any problems along the way or need some help or clarification, be
sure to contact a qualified tax professional for advice on how best to proceed.
No comments:
Post a Comment
I welcome your comments here :)