Taxpayer-Sale of Principal Residence

[mircpa]

Hello Everybody

I have a client who sold his principal residence where he use to live (probably for 15 years) in India before moving to US, currently he is permanent resident here in US, can anybody direct me where to look for sales transaction tax treatment, or any US tax treaty with India

thanks a bunch to all who responds

[Pacun]

I think you have to report income on 1040 for the part that he lived in the US and 1040NR for the part of the year that he lived in India. You get your permanent resident status at the airport and if you sold your house prior to check in with the airport immigration officer and you sold the house before coming, you need to use 1040NR.

Keep in mind that getting the visa, does not make you a U.S. Legal permanent resident.

[mircpa]

I think you have to report income on 1040 for the part that he lived in the US and 1040NR for the part of the year that he lived in India. You get your permanent resident status at the airport and if you sold your house prior to check in with the airport immigration officer and you sold the house before coming, you need to use 1040NR.

Keep in mind that getting the visa, does not make you a U.S. Legal permanent resident.

Pacun

Clinet is US pemanent resident (Green Card) now, stayed in his india house for some 15 years and sold, my question, how do we report this sale, does he get tax exemption as rules go for house hold in US ? or i should refer to tax treaties US had with India

[Pacun]

"now" is irrelevant. Was he a legal permanent resident when he sold the house? If not, maybe you need to use 1040NR. He would qualified for the exclusion if he was a permanent resident, lived in the house and own it for 2 years out of the last 5.

[mircpa]

"now" is irrelevant. Was he a legal permanent resident when he sold the house? If not, maybe you need to use 1040NR. He would qualified for the exclusion if he was a permanent resident, lived in the house and own it for 2 years out of the last 5.

Yes, he was Permanent resident at time of house sale, if i understand correctly, they stayed more than 5 years then moved here and now sold, recap again 15 years ago bought house stayed 5 years, moved here to US, sold house now

[jainen]

>>direct me where to look for sales transaction tax treatment, or any US tax treaty with India<<

You can read about the tax treaty on the IRS web site, http://www.irs.gov/businesses/internationa...=169600,00.html

Your client can get additional help from his embassy. One question will be how to handle a credit or exclusion for double-taxed income. Other than that, my guess is that the sale will be treated in a normal way as a capital asset possibly subject to the Section 121 exclusion.

[mircpa]

>>direct me where to look for sales transaction tax treatment, or any US tax treaty with India<<

You can read about the tax treaty on the IRS web site, http://www.irs.gov/businesses/internationa...=169600,00.html

Your client can get additional help from his embassy. One question will be how to handle a credit or exclusion for double-taxed income. Other than that, my guess is that the sale will be treated in a normal way as a capital asset possibly subject to the Section 121 exclusion.

Hello everybody

Just got off on phone with IRS, Section 121 exclusion is not available since they did not occupy the house for minimum of 2 years within past 5 years, this is FYI

[Pacun]

Hello everybody

Just got off on phone with IRS, Section 121 exclusion is not available since they did not occupy the house for minimum of 2 years within past 5 years, this is FYI

This is what I said before....

""now" is irrelevant. Was he a legal permanent resident when he sold the house? If not, maybe you need to use 1040NR. He would qualified for the exclusion if he was a permanent resident, lived in the house and own it for 2 years out of the last 5."

[mircpa]

This is what I said before....

""now" is irrelevant. Was he a legal permanent resident when he sold the house? If not, maybe you need to use 1040NR. He would qualified for the exclusion if he was a permanent resident, lived in the house and own it for 2 years out of the last 5."

thanks pacun, it is more clear now