Gain on Sale of U.S. Condo by non-residents (one is a citizen)

[ortizSr]

What is the name of your state?What is the name of your state? FLorida

Gentlemen:

What are the Tax consequences on the sale of U.S. Property, a Condo, held for personal use less than 30 days a year by a couple filing 1040NR annually.

One is a U.S. Citizen, and the other is a Venezulan citizen (former U.S. citizen).

Both are retired and receive Social Security Benefits, and the husband also receives a U.S. source pension plan benefits.

Is the gain on the sale of the Condo exempt or taxable???

 

[Snipes5]

The US Citizen doesn't file a form 1040NR, a US Citizen files a standard form 1040, regardless of Country of residence.

If these two are married to each other, the Venezuelan files a form 1040NR, or has the option to choose to be taxed as a US resident, but it also depends on how they have filed in the past. Note that the Venezuelan is only a "former US Citizen" if she has officially renounced her citizenship. Merely leaving the country is not enough to do that.

The US Citizen will file a form 1040 and filing status will be Married Filing a Separate Return.

The gain on the sale of the Condo is taxable to both of them.

They need to find someone to prepare their taxes who has handled a lot of international tax issues, this is not something that the average Joe or TurboTax can handle.

Snipes

 

[ortizSr]

Gain on sale of US Condo by mixed couple

Dear Mr. Snipes5:

Thank you for replying to my inquiry.

Please let me correct my presentation of the facts:

This mixed couple a Venezuelan (renounced US Citizen), and his spouse (A U.S. Citizen) file a 1040 (not a 1040NR) annually on a joint basis as Both receive Social Security benefits, and the hubby receives a pension benefits from a US company.

Here is a quote I copied from a Tax Code source:
If a nonresident alien has a tax home in the United States, income from the sale of capital assets generally is U.S. source. However, capital gains from U.S. sources are exempt from tax if the nonresident alien is present in the United States for less than 183 days during the taxable year unless the gains are effectively connected with a U.S. trade or business or are treated as such (for example, gains from the sale of U.S. real property interests). If the nonresident is present in the United States for 183 days or more during the year, the excess of U.S. source gains over U.S. source losses is taxed at the 30 percent or lower treaty rate. All gains and losses from U.S. sources are taken into account for this purpose. Losses in excess of gains are not allowed. With limited exceptions, a foreign citizen who is present in the United States for 183 days or more during the taxable year will be a resident alien, not a nonresident. The limited exceptions are for certain foreign citizens who can be present in the United States for longer periods as nonresident aliens, including certain diplomats, employees of international organizations (e.g., the United Nations), teachers, trainers, students, and professional athletes. Although a foreign citizen can be a nonresident alien present in the United States for 183 days or more during his or her first or last year of U.S. residency, he or she will not be subject to U.S. taxation on foreign source capital gains arising during the nonresidency period if he or she does not have a U.S. tax home during this period.

As the above states exemption from Capital Gains is available is non-reseident taxpayers are in the US no greater than 183 days in the Tax Year.

To the best of your knowledge is this true???

Respectfully,
Herman Ortiz
6433 Boca Circle
Boca Raton, FL 33433
Tele: 561-338-6406
E-mail: [email protected]


The material world that we see, hear, and feel is always pounding at the doorways to our senses. The spiritual world is more subtle; it takes focus to notice that it, too, sends messages through our physical senses as well as our inner awareness.

 

[Snipes5]

Yes, it is true.

However, in the case you present, the couple are, in fact, both considered U.S. Residents for tax purposes. By filing a joint tax return with a citizen spouse, the non-resident alien has elected to be treated as a citizen/resident alien for tax purposes, so this particular statute does not apply in this case.

The choice can be revoked as follows:

Ending the Choice
Once made, the choice to be treated as a resident applies to all later years unless ended in one of the following ways.

If the choice is ended in one of the following ways, neither spouse can make this choice in any later tax year.

Revocation. Either spouse can revoke the choice for any tax year, provided he or she makes the revocation by the due date for filing the tax return for that tax year. The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. The statement must include the name, address, and identification number of each spouse. (If one spouse dies, include the name and address of the person who is revoking the choice for the deceased spouse.) The statement also must include a list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. File the statement as follows.

If the spouse revoking the choice must file a return, attach the statement to the return for the first year the revocation applies.

If the spouse revoking the choice does not have to file a return, but does file a return (for example, to obtain a refund), attach the statement to the return.

If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where you filed the last joint return.

Death. The death of either spouse ends the choice, beginning with the first tax year following the year the spouse died. However, if the surviving spouse is a U.S. citizen or resident and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died.

Legal separation. A legal separation under a decree of divorce or separate maintenance ends the choice as of the beginning of the tax year in which the legal separation occurs.

Inadequate records. The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records.

Snipes

 

[ortizSr]

Gain on sale of US Condo

Dear Mr. Snipes5:

Let me study your answer, and I will get back to you.

Thank you very much.

Respectfully,
Herman Ortiz
6433 Boca Circle
Boca Raton, FL 33433
Tele: 561-338-6406
E-mail: [email protected]


The material world that we see, hear, and feel is always pounding at the doorways to our senses. The spiritual world is more subtle; it takes focus to notice that it, too, sends messages through our physical senses as well as our inner awareness

 

[ortizSr]

Gain on sale of US Condo by mixed couple

Wednesday, February 16, 2005 4:28 PM EST

Dear Mr. Snipes5:

I have throughly reviewed your comments, and Publications P544, P519, and P523 and will exercise the exemption allowed on the gain by having each of the married taxpayers file separate returns.

Case Closed.

Thank you again. You ahve been the only feedback out of some 5 postings at different tax forums.

Respectfully,
Herman Ortiz
6433 Boca Circle
Boca Raton, FL 33433
Tele: 561-338-6406
E-mail: [email protected]


The material world that we see, hear, and feel is always pounding at the doorways to our senses. The spiritual world is more subtle; it takes focus to notice that it, too, sends messages through our physical senses as well as our inner awareness.

 

[Snipes5]

Be careful if the property is in a community property state.

Snipes