Pay in both countries?
2007-03-17 17:05:14 · 4 answers · asked by Tinribs 4 in Business & Finance ➔ Taxes ➔ United States
Your world-wide income is taxable by the US. If the home in Mexico was your principal residence for at least 2 of the 5 years immediately prior to the sale, you can exclude some or all of the gain from US taxes. The exclusion amount is $250,000 for a single taxpayer and $500,000 for a married couple filing a joint return. There is nothing in the tax code that restricts the exclusion to property in the US.
If any of the gain is taxable in the US, you may be able to take a credit for the foreign taxes paid. See IRS Pub 514 and Form 1116 to see what if any of the credit may apply to your situation. The net effect is that you will pay total tax at the higher of the Mexican or the US rate.
2007-03-17 20:46:26 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
If you are a resident of the US, you must pay taxes on money earned anywhere in the world. There is a capital gains exemption for profits on real estate in the US, though. A married couple have to earn $1.2 million over the cost of a primary residence before they pay taxes on it. Don't know what is considered a capital gain with regards to foreign property, though, but if your primary residence was somewhere besides the house you sold, there would still be a tax on gains made overseas.
You're in the same boat as a company that sells widgets to Europeans, but makes them in the US. Your base of operations (the US) is where you pay taxes on the profits.
2007-03-17 17:20:03 · answer #2 · answered by normobrian 6 · 1⤊ 1⤋
The income tax rules say each and every American, no longer each and every resident, pays an income tax. you are able to reinvest the capital helpful aspects interior 18 mos. right into a conventional place of residing for sheltering. you are able to deduct any distant places tax paid out of your income as calculated as your gross adjusted. i do no longer see the problem. Dont' pay it, enable it accrue pastime and effects, resign your US citizenship, become a Mexican.
2016-12-18 16:33:01 · answer #3 · answered by ? 4 · 0⤊ 0⤋
Taxes on the gain you paid to Mexico will be credited to you on your US tax return.
Your US capital gains tax for the sale will be taxed based on the computation you will do on Schedule D.
If this is your main home (which it doesn't seem to be), you may be eligible for an exclusion on the US capital gains tax.
2007-03-18 08:35:44 · answer #4 · answered by ninasgramma 7 · 0⤊ 0⤋