Capital Gains Tax for Foreigners. I know this is an IRS / tax accountant question but was wondering if anyone knew the answer. I am a foreigner that purchased my condo in 2001 after living 1 year in New York. I have a social security card, am working in under H1B. I am now relocating back to my home country. I am considering selling my condo. However I was wondering how capital gains tax work for... [more]
Capital Gains Tax for Foreigners.
I know this is an IRS / tax accountant question but was wondering if anyone knew the answer. I am a foreigner that purchased my condo in 2001 after living 1 year in New York. I have a social security card, am working in under H1B. I am now relocating back to my home country.
I am considering selling my condo. However I was wondering how capital gains tax work for a foreigner. Also note that my gains will definitely exceed the $250k capital gains allowance IRS set for a single person. I am using the condo currently as my primary resident.
1) After the first $250k gain, will the additional income be taxed at my 2008 standard income tax rate? Ie. Will the income be considered part of my 2008 taxable income?
2) As a foreigner working in USA but paying US income taxes in 2008, am I subject to the same capital gains tax as a US citizen?
3) If I chose to sell in 2009 (when I’m now living in my home country and hence a complete foreigner), am I subject to any capital gains?
4) If I chose to rent the condo out, how does rental income get taxed as a local vs foreigner?
The reason for asking is that I know for stock investment, foreigners living outside of USA are not subject to any US capital gains tax. I do not know if the same applies for real estate investments.
Basically, I was wondering if there is a tax advantage if I close in 2009 vs 2008 (assuming markets are same).
I was wondering if there are any foreign investors on this board that have similar experience, point me to some directions and/or can recommend me a good international tax accountant.
Thanks in advance.
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Response by doglover
almost 18 years ago
Posts: 11
Member since: Oct 2007
since you are on an h1B and have lived and worked in the US for atleast the last 5 years, you are considered a "US resident" for tax purposes and thus US citizen rules apply to you as well. to pay the least taxes, it is best to sell while retaining your "US residency" I believe. Foreigners are indeed taxed on capital gains earned from real estate and I believe at a long term rate of 15% plus atleast 10% for local NYC taxes.
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Response by nyc119
almost 18 years ago
Posts: 10
Member since: Dec 2007
thanks doglover. what is the capital tax rate for US residents?
Is it same as your normal income tax rate?
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since you are on an h1B and have lived and worked in the US for atleast the last 5 years, you are considered a "US resident" for tax purposes and thus US citizen rules apply to you as well. to pay the least taxes, it is best to sell while retaining your "US residency" I believe. Foreigners are indeed taxed on capital gains earned from real estate and I believe at a long term rate of 15% plus atleast 10% for local NYC taxes.
thanks doglover. what is the capital tax rate for US residents?
Is it same as your normal income tax rate?