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.
[less]
Response by doglover
over 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.
Ignored comment.
Unhide
Response by nyc119
over 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?
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?