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QUESTION:
I recently did taxes for a citizen of Great Britian now living (and
working)in the U.S. He sold his house in England after renting it out =
for a
year. He is able to exempt part of the gain since it was his main =
residence
for almost two years and he sold it due to a job move. Our biggest =
problem
is the difference in valuation in the currency. When he bought the =
house,
the exchange rate was $1.50 lb for $1.00 U.S. When he sold the house, =
the
exchange rate was $1.65 lb for $1.00 U.S. That means he has a gain also =
due
to the exchange rate. My question (finally, I get to my question). Can =
this
gain be considered part of the gain for sale of the house (and therefore
excluded as part of the gain on the house) or does it have to be =
considered
an investment gain (a separate transaction) and put on Schedule D? I =
wrote
to the IRS but they completely ignored the question and just sent me to =
a
publication that had nothing about this.
Thank you for your help.
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
david ingram replies:
I thought I had answered this question a month ago, but if I did, I =
can't find the reply.
The currency exchange is part fo the sale profit on the house. It =
happens all the time, particulary her in Vancouver where so many =
Canadians have a place in Palm Springs, Mount Baker, Scotsdale or Point =
Roberts and so many Americans have properties in the Gulf Islands or =
Whistler.
No separate schedule. Just convert it to American Dollars at the =
purchase and sale dates and the result is the figure you use.
And for Great Britain, the cost is the price he paid for it and i hve =
just spent an housr going over the UK / United States Tax Treaty looking =
for a similar provision to Article XIII(6) of the Canada / United States =
Tax Treaty which reads a follows:
6. Where an individual (other than a citizen of the United States) who =
was a resident of Canada became a resident of the United States, in =
determining his liability to United States taxation in respect of any =
gain from the alienation of a principal residence in Canada owned by him =
at the time he ceased to be a resident of Canada, the adjusted basis of =
such property shall be no less than its fair market value at that time.
What this means is that if your client had been a Canadian, the US cost =
price of the former personal residence would have been the value on the =
date he became a US resident, not what he paid for it.
This Article came into force on Sept 26, 1980 and in the 23 years or so =
in between, I have never seen another accountant anywhere invoke it even =
though it would always result in less US tax. In one case involveing a =
very expensive house, I got back a $43,000 US refund by refiling. =20
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321=20
[email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed =
information or consultation and is to be regarded only as general =
comment. Nothing in this message is or should be construed as advice =
in any particular circumstances. No contract exists between the reader & =
the author and any and all non-contractual duties are expressly denied. =
All readers should obtain formal advice from a competent financial, or =
real estate planner or advisor & appropriately qualified legal =
practitioner, tax or immigration specialist in connection with personal =
or business affairs such as at www.centa.com. If you forward this =
message, this disclaimer must be included."
This from "ask an income tax and immigration and bankruptcy expert" from =
www.centa.com or www.jurock.com or www.featureweb.com. Canadian David =
Ingram deals daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate problems for the =
United States, Canada, Mexico, Great Britain, the United Kingdom, =
Kuwait, Dubai, Saudi Arabia, South Africa, Thailand, Indonesia, Egypt, =
Antarctica, Japan, China, New Zealand, France, Germany, Spain, Italy, =
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Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, =
Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and =
Canadian and Mexican and any of the 43 states with state tax returns, =
etc.
income tax wizard wizzard guru advisor specialist consultant taxman =
Alaska, Alabama, Arkansas, Arizona, California, Colorado, =
Connecticut, Delaware, District of Columbia, Florida, Georgia, =
Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, =
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Wisconsin, Wyoming, British Columbia, Alberta, Saskatchewan, Manitoba, =
Ontario, Quebec City, New Brunswick, Prince Edward Island, Nova Scotia, =
Newfoundland, Yukon and Northwest and Nunavit Territories, Mount =
Vernon, Eumenclaw, Coos Bay and Dallas Houston Rockwall Garland Texas =
Taxman and Tax Guru and wizzard wizardYour name has been added to our =
email list because of an enquiry we have received, we may not answer =
your question but=20
another similar question will be as we lump them.
You may find more answers at www.centa.com
David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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