gains exclusion for foreign home
I have sold a home abroad after living in it for five years
and then emigrated to the U.S. I was already a permanent U.S. resident by the
time of sale. Do I owe Uncle Sam any tax for the profit, which was around $100,000?
You can exclude up to $250,000 of the gain on the sale of your main
home if you meet the ownership and use test.
Also, to claim the exclusion during the two-year period
ending on the date of the sale, you must not have excluded gain
from the sale of another home.
To pass the ownership and use test means that during
the five-year period ending on the date of the sale, you have to
meet two main criteria.
|You must have: |
The law does not differentiate whether the home is
in a foreign country. It also does not consider whether you were
a resident of this country during the period of ownership and use.
For example, if a U.S. citizen resided in Paris for two of the last
five years, that home could be considered his or her personal residence
and qualify for gain exclusion. Accordingly, so long as within two
of the last five years ending on the date of the sale, you used
and owned the foreign-country home as your principal residence,
you will not owe tax on the $100,000 gain.
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