robbie3002

trying to understand this and how I can avoid it.

Pulaski

Sell before you leave the US, otherwise it is unavoidable. The withheld tax unwinds when you complete your tax return.

robbie3002

I think I read somewhere that I would have to have had the house as main resident for 2 years or something.

Pulaski

Two of the last five years, yes.

robbie3002

only owned the house 1yr 2 months!

robbie3002

the house is in joint names and haven't divorced yet. but my wife moved out 3 months ago, I am still living in the house, does that complicate things if she has moved out?

Pulaski

Moving out, no; filing taxes separately, maybe, if there is a gain on the sale.

The only real issue, from a tax perspective, arises if you sell at a profit, but unless your house is in an exceptionally hot market, surely you'll be selling at a loss, after realtors fees? In which case you will get back your withheld tax when you file your taxes for 2016.

robbie3002

but what about this FIRPTA, surely I have to stay here for 2 years

Pulaski

But you're not going to, are you?

robbie3002

the house is worth, well I bought it for $320,000 and really don't fancy paying 15%

robbie3002

i just need to work out what my best options are. the money i put it to it all, well i bought the house for case from sale of my uk property, so is my life savings. and my childrens inheritance

Pulaski

Well for starters the withholding rate is still only 10% for properties worth less than $1million.
Isn't it a bit late to be thinking about that?

Did you have a pre-nup?

If you don't sell at a profit you don't have much to worry about, other than some paperwork.

robbie3002

no pre nup! i know stupid. i have an email from wife saying i would get my $320,000 back if we split and any profits shared. if i sell no there is no profit, and then the agents fees etc etc

robbie3002

it is always too late to think of things after the event, a year of so ago we were happy as larry. then things change!