Originally Posted by Aerodyne
#1;Do I need to pay tax to the American IRS on selling the house?
#2;One tax expert says that yes, as this is a capital gain and I am a US resident.
#3;The other expert says this is not a standard case of an American citizen investing in real estate and making a profit. He looks at the relocation circumstances.
#4;However one of the tests (conditions) there for full exclusion, is to live in the house for at least 2 years in the past 5. I could not find guidance for a case where the house was under construction.
Thank you in advance,
#1;Yes; Short-term capital gains are taxed like ordinary income at tax rates up to 35% for 2012 (and 39,6% in 2013). For example if you bought a house in February 2012 and sold them in November 2012, your gain or loss on the investment will be classified as short-term. Long-term capital gains (assets held for more than one year) are taxed at 0% for taxpayers in the 10% and 15% tax brackets and 15% for taxpayers in the 25%, 28%, 33%, and 35% tax brackets. The 0% tax rates for those in the 10% and 15% federal income tax brackets was a special provision in the bush-era tax cuts which were extended to 2013. please read below.
#2; The tax expert is true; as a US person, a green card holder, as you can see, you are subject to US taxers on your US source and world wide income that you earn overseas; however, as long as you pay capital gain tax(either STCG or LTCG) t the foreign taxing authority (ies) , then you can claim the CG tax paid to the foreign taxing authority(ies) on your federal/ state returns(UNLES you liec in CA state) by filing form 1116 on line 47 of 1040 or on Sch A of 1040 line 8.
#3;As mentioned above, you , as a US resident , a green card holder, are subject to US taxes on your world wide income and US source income to the IRS/ your state.
#4;Correct;UNLESS you lived in the house overseas for at least 2 years in the past 5 as your main home, NOT aas your second home, you could not qualify for the exclusion up to $500K for joint filers, $250K for a MFS/single filer.