[an error occurred while processing this directive] [an error occurred while processing this directive] July 2001   [an error occurred while processing this directive] [an error occurred while processing this directive]   Refinancing a Residence
  Isle of Man Tax Haven
  Sale of a Residence by a Non-US Citizen
  U.S. person Working in China
[an error occurred while processing this directive][an error occurred while processing this directive] [an error occurred while processing this directive] 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. [an error occurred while processing this directive] 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. [an error occurred while processing this directive] The Tax Prophet's section onTax Class/Real Estate [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 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? [an error occurred while processing this directive] 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. [an error occurred while processing this directive] The Tax Prophet's articles on Off-Shore Trusts [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 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? [an error occurred while processing this directive] 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. [an error occurred while processing this directive] The 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] 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. [an error occurred while processing this directive] 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. [an error occurred while processing this directive] The 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]