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I refinanced my house and took cash out. I spent the money on
upgrades to the house in siding, shingles, and other improvements. I would like to
know if these improvements are tax deductible.
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 No. But you can add those costs to
the basis of the house when you determine its sales price. Also, those amounts do
not count as part of the $100,000 home-equity interest deduction limitation, unless you've
borrowed more than $1 million for your home and improvements under the qualified residence
exception for interest deductions.
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I am an American citizen working for Japan and am interested in setting up a
"portfolio" in a tax free country (Isle of Man). I am assured that I can
make investments and receive income, in the form of dividends and/or coupons, tax free
until I repatriate the money into the US. I would then pay long term capital gains
on earnings. There is clearly an advantage to doing this but I wish to verify that
this information is correct. Can you give me any guidance?
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While I have no direct
knowledge about this specific proposal, read my columns regarding foreign tax havens and
the crackdown on their activities by developed nations (Hot Topics Section of my website).
These are usually dubious schemes that the IRS will attack as improper or possibly
fraudulent. Often, there is no legal authority for the positions taken with respect
to U.S. law, and usually there is no legal opinion written by a reputable U.S. law firm
that endorses the concept. Ask for a U.S. legal opinion on the issue and read it
carefully to make sure the opinion says the transaction is valid under U.S. law,
particularly the opinion should not hedge on the issue of legality.
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I am a non-resident alien on an H-1 visa. I have been
living in the US for almost 10 years. I purchased a home in Texas last year and am going
to sell it. I don't expect a profit on the sale (after selling costs). I would like
to know 1. How much foreign estate tax would be withheld when I sell the house? 2. Is this
tax computed on the sale price or on the sale price minus the mortgage and selling costs?
3. Since I am not making a profit, can I avoid this estate tax?
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If you are a U.S.
resident for tax purposes, there is no withholding; otherwise withholding is 10% on the
gross proceeds, unless you file for an exemption prior to closing because there will not
be a profit. If you are a U.S. resident, (note: after living in the U.S. for
10-years, you'd be considered a U.S. resident) then you'll pay income and estate taxes,
just like any other U.S. citizen or resident.
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I am living and working
in China, what are my personal income tax obligations to China? My income originates
in USA, but is then transferred into China as required for normal living expenses.
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You
are taxable on income from sources within China, including salary and wages earned from
labor, whether or not the income is paid to you in China or by a Chinese or foreign
employer. You must file with the local tax authorities in charge of tax
registration. Usually, if taxes are withheld by your employer and paid to China, you
do not have to file tax returns; otherwise, you file monthly, within the first 7 days of
the following month.
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Refinancing a
Residence
