US Citizens living in Spain

[Pacun]

Married US citizens went to live in Spain 10 years ago and left a house in the care of their three children. Children lived there and maintained it and paid house taxes yearly. Cost of home, $400K sold for $1,200,000.  Improvements $100K. So profit was $700K. 

Their income is only about $10K each in SS.  Any breaks on the profits of the house? 

 

[Pacun]

It is interesting to see that if you have profit on a house and you stablish residency on another state where there is no capital gain taxes, you can save about 100K in a million dollars capital gains. 

[Lion EA]

The state where the house is located will want their taxes, too!

[Sara EA]

To get the exclusion, the instructions clearly state that each spouse must meet the residency requirement.  It says nothing about children living there.  Looks like your clients will have to pay cap gains tax but, hey, they made A LOT of money on the sale.  Don't forget to add selling expenses to their basis.  I bet the realtor commission was enormous.