I am US citizen but Mexican resident, I sold my Mexican house. US accountant says I pay tax in USA?

Question

I am an American citizen and live as "resident of Mexico" for the last 8 years, I just sold my Mx.house and bought a smaller one. This year my accountant in NJ says even though I satisfied the Mx.tax law I have to pay US taxes on capital gains. This seems to be unfair, I moved to Mx. not just because I love it, the climate, the natural foods, the people, but because it is more affordable than living in say, -CA. I think my NJ accountant is very knowledgeable but is this correct, to pay in both countries. I feel I'm being punished.

Answer 1

Lissa doesn't know what she is talking about.

You don't necessarily have to relinquish your citizenship.

I would find a different accountant. If you have lived outside the U.S. for over a year, had all your earnings outside the U.S., and didn't return to the U.S. within that year, I don't believe you would owe any income tax at all.

If you are simply residing in Mexico, while working in the U.S., your taxes would be due in the U.S.

Any taxes you have to pay in Mexico, would actually be treated as a tax deduction for any U.S. taxes.

As far as capital gains, if it was your primary residence for 2 or more years, you have an exemption. That amount increases every year, and is around $250,000.

Good Luck.

Answer 2

in order to eliminate paying the taxes on your capital gains you would have to relinquish your status as an American citizen (no longer have U.S. citizenship) if you love Mexico and live there maybe this is the right choice for you..if you never plan on coming back to the U.S. there isn't just a great deal they can or will do..however you will start to accumulate back taxes plus penalties and interest..so it's really a matter of how important your citizenship status is to you.Hope this helps! God Bless!

Answer 3

The income tax laws say every American, not every resident, pays an income tax. You can reinvest the capital gains within 18 mos. into a primary residence for sheltering. You can deduct any foreign tax paid from your income as calculated as your gross adjusted. I don't see the problem. Dont' pay it, let it accrue interest and penalties, renounce your US citizenship, become a Mexican.

Answer 4

if you're a resident of the U. S., you may pay taxes on money earned everywhere in the international. there's a capital valuable factors exemption for income on genuine belongings in the U. S., even if. A married couple could earn $a million.2 million over the cost of a first position of living formerly they pay taxes on it. don't be conscious of what's considered a capital benefit appropriate to overseas belongings, even if, yet when your familiar position of living replaced into someplace as well the living house you bought, there ought to nonetheless be a tax on valuable factors made foreign places. you're interior a similar boat as a organisation that sells widgets to Europeans, yet makes them in the U. S.. Your base of operations (the U. S.) is the position you pay taxes on the income.