How do US taxes on sale of home work before becoming a permanent resident?

[ChefCurry 0]

I have received an F4 immigration visa in Hong Kong. Before moving to the US and becoming a permanent resident, do I have to pay US taxes on the sale of my home prior to moving? What about if I am unable to sell the home prior to becoming a permanent resident? How will US taxes affect the sale if I am to sell the home after moving to US?

 

I am trying to find answers but I am not finding any information on travel.state.gov. If anyone can help me answer these questions or lead me to a resource where I can study this information that would be greatly appreciated.

[JeanneAdil 6,498]

if u sell it after becoming a LPR,  i would suggest a good tax preparer for the year u sell it

 

form 8949 is the form for capital gains 

be sure u have proofs of what is still owed on the property at time of sale and what your profit will be

and what taxes were paid on the sale to your country 

 

When you sell property or real estate in the U.S. you need to report it and you may end up owing a capital gains tax. The same is true if sell overseas property. The U.S. is one of only a few countries that taxes you on worldwide income — and gains made from foreign property sales are considered foreign income.

[Boiler 45,486]

Sell before you move or bend over.

[ChefCurry 0]

 26 minutes ago, JeanneAdil said:

if u sell it after becoming a LPR,  i would suggest a good tax preparer for the year u sell it

 

form 8949 is the form for capital gains 

be sure u have proofs of what is still owed on the property at time of sale and what your profit will be

and what taxes were paid on the sale to your country 

 

When you sell property or real estate in the U.S. you need to report it and you may end up owing a capital gains tax. The same is true if sell overseas property. The U.S. is one of only a few countries that taxes you on worldwide income — and gains made from foreign property sales are considered foreign income.

 

9 minutes ago, Boiler said:

Sell before you move or bend over.

 

So if I were to sell it before I move, I wouldn't have to pay any taxes on the profit, is that correct?

 

Let's say I couldn't sell it. Would I have to pay capital gains tax on the profit of the home valued from the day I purchased or would capital gains only apply to what the home is valued starting the day I become a permanent resident?

Edited September 8, 2022 by ChefCurry

[Boiler 45,486]

Until you are a PR then you are not subject to US taxes

 

If you have a significant gain then you need to find out what your liability will be, may be cheaper selling at a discount.

[Wuozopo 4,293]

6 hours ago, ChefCurry said:

am trying to find answers but I am not finding any information on travel.state.gov.

 That’s because it’s an IRS topic, not immigration. Here are some sources to study:

https://www.irs.gov/pub/irs-pdf/p523.pdf

 

https://www.irs.gov/taxtopics/tc701

 

https://www.irs.gov/businesses/small-businesses-self-employed/sale-of-residence-real-estate-tax-tips
 

https://www.irs.gov/businesses/small-businesses-self-employed/selling-your-property

[ChefCurry 0]

5 hours ago, Wuozopo said:

 That’s because it’s an IRS topic, not immigration. Here are some sources to study:

https://www.irs.gov/pub/irs-pdf/p523.pdf

 

https://www.irs.gov/taxtopics/tc701

 

https://www.irs.gov/businesses/small-businesses-self-employed/sale-of-residence-real-estate-tax-tips
 

https://www.irs.gov/businesses/small-businesses-self-employed/selling-your-property

I read through the links and they're real estate taxes for people who already pay US taxes but what I'm trying to figure out is what my tax liability is if I can't sell the existing home until after becoming a permanent resident. Does the capital gains tax from the profit of the home get calculated based on the sale price minus purchase price, which is pre-permanent resident, or is it sale price minus value of home on day of becoming a permanent resident?

[STO Overland 137]

It has nothing to do with the sale price minus value of home at any time. It's a calculation based on "sales price minus cost basis" (cost may be made up of purchase price, fees and expenses associated with the purchase of the home, home improvements, any additions or major repairs that weren't reimbursed by insurance etc). Then there is an exemption for sale of a primary home and whether you are filing jointly ($500k) or separately ($250k). 

 

Taxes are complicated enough if you have been here for the entire tax year never mind for a portion of that year. It is always best to consult with a tax attorney in the first instance..everyone's circumstances differ and the majority on here are not tax experts. I've been in the US for a total of 15 years on and off and in various guises with home sales both here and overseas complicating matters and it's only been in the past 3-4 years that I've been confident enough to use a tool like Turbotax to file my taxes as opposed to using a professional's help.

Edited September 9, 2022 by STO Overland

[Crazy Cat 41,845]

22 hours ago, ChefCurry said:

I have received an F4 immigration visa in Hong Kong. Before moving to the US and becoming a permanent resident, do I have to pay US taxes on the sale of my home prior to moving? What about if I am unable to sell the home prior to becoming a permanent resident? How will US taxes affect the sale if I am to sell the home after moving to US?

 

I am trying to find answers but I am not finding any information on travel.state.gov. If anyone can help me answer these questions or lead me to a resource where I can study this information that would be greatly appreciated.

I would close the sale prior to moving, if possible. Unless you choose to file as a full-year resident for tax purposes (I'm not sure why you would), you will not be required to pay taxes on income generated before becoming a legal resident.  I always advise new immigrants to seek the advice of a COMPETENT tax pro the first year.  Tax strategies can vary based on many variables such as country of origin, income level, etc.  

Edited September 9, 2022 by Crazy Cat

[Wuozopo 4,293]

10 hours ago, ChefCurry said:

I read through the links and they're real estate taxes for people who already pay US taxes but what I'm trying to figure out is what my tax liability is if I can't sell the existing home until after becoming a permanent resident. Does the capital gains tax from the profit of the home get calculated based on the sale price minus purchase price, which is pre-permanent resident, or is it sale price minus value of home on day of becoming a permanent resident?

Once you become a permanent resident, you follow all the same rules as those you described as “people who already pay US taxes”. You are those people and the information in Publication 523 (22 pages) applies to you if you sell a home when you are a permanent resident. It goes into detail about how to determine your basis if you don’t qualify for any of the exemptions or partial exemptions. Nowhere does it say “If you just became a permanent resident….”  Your gain is based on what you paid for the property when you bought it. But you do get to decrease your gain by fees for selling, improvements, repairs, etc…read the details in Pub 523. And then as a long term gain, you are taxed on 20%.  And your Foreign Earn Income Exclusion is a factor when calculating all this. It will be complicated to navigate the worksheets involved in all of this. TurboTax will navigate the forms and do the math for you, but you have to give the correct information like basis, etc. That would require you becoming informed using Publications from the IRS. If you aren’t up to that, then you need a tax professional and that is not the ones found in Walmart kiosks like H&R Block or the pop up tax places in strip malls.  

Edited September 9, 2022 by Wuozopo

[ChefCurry 0]

Thanks for the replies. It sounds very complicated and I am just afraid the market right now isn't the best and the home will sit on the market for longer than my visa expiration in ~5 months.