February 2004   [an error occurred while processing this directive] [an error occurred while processing this directive]   Partial Residence Exclusion
  Property Sale by Foreigner
  Foreign Real Estate Purchase
  Employee Stock Option Taxation
[an error occurred while processing this directive][an error occurred while processing this directive] [an error occurred while processing this directive] I've owned my condo less than 2 years. Now, my husband and I are expecting a child and need to move into a bigger residence. Does the birth of a child qualify for an exemption from paying capital gains tax on a property I have owned for less than two years? [an error occurred while processing this directive] Apparently not. IRS defines unforeseeable circumstances as multiple births from the same pregnancy.

A portion of the exclusion is available for those who lived in their residence for less than 24 months, but had to sell the residence for health or job-related reasons or other unforeseeable circumstances, including: death; becoming eligible for unemployment compensation; a change in employment that leaves the taxpayer unable to pay the mortgage or reasonable basic living expenses; multiple births resulting from the same pregnancy; damage to the residence resulting from a natural or man-made disaster, or an act of war or terrorism; and condemnation, seizure, or other involuntary conversion of the property. [an error occurred while processing this directive] Tax Prophet's Tax Class on Principal Residence Taxation [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] I am a United Kingdom resident and citizen. I just sold a vacation home located in the U.S. and made a $30,000 profit. Do I have to pay tax on this profit? [an error occurred while processing this directive] Yes. You owe capital gains taxes on the profit. Under U.S. law, the buyer or the escrow agent was supposed to withhold taxes equal to 10% of the sales price, and pay the taxes to the Treasury. You are then entitled to file a tax return (Form 1040 NR) to claim any refund due you because of the withholding. [an error occurred while processing this directive] Tax Prophet's Section on Foreign Taxpayers [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] We purchased a real estate investment property in Australia. How do we declare the rental income earned abroad? [an error occurred while processing this directive] If you are U.S. taxpayers, you treat the rental as though it were located in the U.S., except you may be entitled to a foreign tax credit for a portion of any taxes paid to Australia. You'll probably have to complete an Australian tax return as well. [an error occurred while processing this directive] Tax Prophet's Tax Class on Real Estate Taxation [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] Is a stock option taxable in the state of residence when it was granted or in the state of residence where it was finally exercised? [an error occurred while processing this directive] If an employee stock option vests while the taxpayer is a resident of California, the exercise of the option will be taxable in California, either as compensation income or an AMT preference (if the option was an Incentive Stock Option). Once the option is exercised, the later sale of the actual stock will be taxed in the state of residence at the time of sale. Thus, if you early exercise your options while a California resident and pay little or no tax on the transaction, then legitimately move to Nevada and sell your stock, there should be no state tax on the sale of the stock. [an error occurred while processing this directive] Tax Prophet's Section on Employee Stock Options [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive]