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Sale by US Citizen of foreign residence

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kingstarnes

Junior Member
What is the name of your state? SC

A US citizen wishes to sell his home/farm in South Africa. If the proceeds from the sale are transferred to an offshore trust/account and the funds are only used outside the US, is the sale/capital gain reportable to the US?

This individual indicated that they spoke to other accountants and was told that as long as the proceeds remained outside the US that they would not be taxable.

My understanding (I am not a tax professional) is that the only exemption a US citizen receives for a sale of a home is $250,000 for a primary residence regardless of where it is foreign or domestic.

I appreciate any response you have to offer.
 


LdiJ

Senior Member
What is the name of your state? SC

A US citizen wishes to sell his home/farm in South Africa. If the proceeds from the sale are transferred to an offshore trust/account and the funds are only used outside the US, is the sale/capital gain reportable to the US?

This individual indicated that they spoke to other accountants and was told that as long as the proceeds remained outside the US that they would not be taxable.

My understanding (I am not a tax professional) is that the only exemption a US citizen receives for a sale of a home is $250,000 for a primary residence regardless of where it is foreign or domestic.

I appreciate any response you have to offer.
A US citizen or legal resident is required to report and pay taxes on their worldwide income. Therefore, the individual got incorrect advice. Now, its probably true that the IRS would never find out about the income if it was kept offshore and not spent in the US, but if the IRS ever found out about it, it would be a true fraud case, which carries not only high penalties, but possible jail time as well.

Not worth the risk in my eyes.
 

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