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Selling house on L1 visa

Selling house on L1 visa

Old Jul 30th 2005, 1:47 pm
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Default Selling house on L1 visa

Has anyone on a L1 visa sold a house. I was wondering what the tax liabilities would be for a $180k capital gain. I am considered a resident for tax purposes and I have lived in the property for more than 2 years. Would the title company withold anything at closing and send to IRS. Any help would be appreciated.

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Old Jul 30th 2005, 2:04 pm
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Default Re: Selling house on L1 visa

Originally Posted by vegas
Has anyone on a L1 visa sold a house. I was wondering what the tax liabilities would be for a $180k capital gain. I am considered a resident for tax purposes and I have lived in the property for more than 2 years. Would the title company withold anything at closing and send to IRS. Any help would be appreciated.
I think for a non-resident alien is something like 26% ... but not to be taken as fact ..your situation may be different though ... If you are buying elswhere makes a difference as well... The title company normally do the witholding...
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Old Jul 30th 2005, 3:57 pm
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Default Re: Selling house on L1 visa

i was advised by Deloitte if we ever wanted to sell UK house there would be bad tax implications - no idea on detail though as its not in our plans!
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Old Jul 30th 2005, 4:27 pm
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Default Re: Selling house on L1 visa

Originally Posted by vegas
Has anyone on a L1 visa sold a house. I was wondering what the tax liabilities would be for a $180k capital gain. I am considered a resident for tax purposes and I have lived in the property for more than 2 years. Would the title company withold anything at closing and send to IRS. Any help would be appreciated.
I wouldn't have thought there would be any as the threshold is $250,000. http://taxes.about.com/od/taxplannin...e_sale_tax.htm

As for selling a UK property the tax implications only come in if you have rented the property out for more than 3 years I believe (it had to have been your main residence for 3 out of the last 5 years), but this may not be entirely correct. I'm selling my place in the UK now so I'll find out soon.
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Old Jul 30th 2005, 5:36 pm
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Default Re: Selling house on L1 visa

Originally Posted by neil
I wouldn't have thought there would be any as the threshold is $250,000. http://taxes.about.com/od/taxplannin...e_sale_tax.htm

As for selling a UK property the tax implications only come in if you have rented the property out for more than 3 years I believe (it had to have been your main residence for 3 out of the last 5 years), but this may not be entirely correct. I'm selling my place in the UK now so I'll find out soon.
I agree with Neil here on most points. There's a $250,000 lower limit on capital gains from your primary residence, so you won't trigger that with your $180,000 gain. Since you are resident for tax purposes, your visa status does not come into this. Ray's mistake is a common one, thinking that a L1 or H1 visa holder is somehow a non-resident alien for tax purposes. So long as you meet the substantial presence test you are resident for tax purposes, regardless of your visa status.

As for selling a home in the UK, Neil is mostly correct but it's two years, not three. So long as you have owned it for more than 2 years, and it was your primary residence for at least 2 years at any stage, you are subject to the same $250k capital gains limit. If you fail the primary residence test either because you didn't own it for long enough or you didn't live in it for 24 months as your primary residence then you are subject to capital gains,
but only prorated to account for the shortfall in meeting the primary residence tests.

When we sold our home in the UK we had owned it for 32 months, but only lived in it for 25 months before coming to the US. We met the primary residence tests but only just. Had we lived in it for 50% of the required time (12 months) then we could only have excluded $125k of our gains from Capital Gains tax.

Full details on the Capital Gains implications of selling your primary residence are here on the IRS site.

Last edited by dbj1000; Jul 30th 2005 at 5:38 pm.
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Old Jul 30th 2005, 5:48 pm
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Default Re: Selling house on L1 visa

Originally Posted by dbj1000
I agree with Neil here on most points. There's a $250,000 lower limit on capital gains from your primary residence, so you won't trigger that with your $180,000 gain. Since you are resident for tax purposes, your visa status does not come into this. Ray's mistake is a common one, thinking that a L1 or H1 visa holder is somehow a non-resident alien for tax purposes. So long as you meet the substantial presence test you are resident for tax purposes, regardless of your visa status.

As for selling a home in the UK, Neil is mostly correct but it's two years, not three. So long as you have owned it for more than 2 years, and it was your primary residence for at least 2 years at any stage, you are subject to the same $250k capital gains limit. If you fail the primary residence test either because you didn't own it for long enough or you didn't live in it for 24 months as your primary residence then you are subject to capital gains,
but only prorated to account for the shortfall in meeting the primary residence tests.

When we sold our home in the UK we had owned it for 32 months, but only lived in it for 25 months before coming to the US. We met the primary residence tests but only just. Had we lived in it for 50% of the required time (12 months) then we could only have excluded $125k of our gains from Capital Gains tax.

Full details on the Capital Gains implications of selling your primary residence are here on the IRS site.
Awesome post!
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Old Jul 30th 2005, 9:01 pm
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Default Re: Selling house on L1 visa

Originally Posted by Chandler
Awesome post!
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Old Jul 30th 2005, 9:26 pm
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Default Re: Selling house on L1 visa

Originally Posted by dbj1000
I agree with Neil here on most points. There's a $250,000 lower limit on capital gains from your primary residence, so you won't trigger that with your $180,000 gain. Since you are resident for tax purposes, your visa status does not come into this. Ray's mistake is a common one, thinking that a L1 or H1 visa holder is somehow a non-resident alien for tax purposes. So long as you meet the substantial presence test you are resident for tax purposes, regardless of your visa status.

As for selling a home in the UK, Neil is mostly correct but it's two years, not three. So long as you have owned it for more than 2 years, and it was your primary residence for at least 2 years at any stage, you are subject to the same $250k capital gains limit. If you fail the primary residence test either because you didn't own it for long enough or you didn't live in it for 24 months as your primary residence then you are subject to capital gains,
but only prorated to account for the shortfall in meeting the primary residence tests.

When we sold our home in the UK we had owned it for 32 months, but only lived in it for 25 months before coming to the US. We met the primary residence tests but only just. Had we lived in it for 50% of the required time (12 months) then we could only have excluded $125k of our gains from Capital Gains tax.

Full details on the Capital Gains implications of selling your primary residence are here on the IRS site.
Thanks for such a comprehensive answer. I can't help but think that the title company will deduct 10 % and send it to the IRS and I will have to claim it back again. I will keep you updated on what they do when I eventually get a buyer.
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Old Jul 31st 2005, 1:32 pm
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Default Re: Selling house on L1 visa

Originally Posted by dbj1000
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I tried, but appraently I need to be a bit more sluty and spread it around some more.
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Old Jul 31st 2005, 1:36 pm
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Default Re: Selling house on L1 visa

Originally Posted by vegas
Thanks for such a comprehensive answer. I can't help but think that the title company will deduct 10 % and send it to the IRS and I will have to claim it back again. I will keep you updated on what they do when I eventually get a buyer.
This property is in the US? How would the title company know about your visa status? I have never been asked for my visa status as part of the closing process.
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Old Jul 31st 2005, 5:02 pm
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Default Re: Selling house on L1 visa

Originally Posted by Pulaski
This property is in the US? How would the title company know about your visa status? I have never been asked for my visa status as part of the closing process.
Interesting. I assumed that they would ask to see our green cards at closing and as we are waiting on a I485 AOS we only have L1 visas at present. And yes the property is in Tampa.
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Old Jul 31st 2005, 7:23 pm
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Default Re: Selling house on L1 visa

Originally Posted by vegas
Interesting. I assumed that they would ask to see our green cards at closing and as we are waiting on a I485 AOS we only have L1 visas at present. And yes the property is in Tampa.
Your visa has nothing to do with the Title company, nor any other entity involved in the buying/selling of a home... with the possible exception of your mortgage company.

Nobody but our mortgage company asked to see our visas when we bought our home, and if they had I would have fired them unless they had a very real reason to make the request. There are too many people in this country who are quick to use your visa as a reason to exercise their innate racism -something I've encountered too many times to allow anyone to question me on my visa status unless they can prove that they have a legal requirement to do so.

If your Title company attempt to withhold 10% of the proceeds of your sale, demand that they justify this with a written explanation. I can't see how they would justify it, and you're certainly not required to accept a major error on their part. There are many, many Title companies out there, all willing to take their disproportionate cut of your money as a fee!
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Old Aug 2nd 2005, 9:11 pm
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Default Re: Selling house on L1 visa

Originally Posted by vegas
Interesting. I assumed that they would ask to see our green cards at closing and as we are waiting on a I485 AOS we only have L1 visas at present. And yes the property is in Tampa.
There are plenty of Brits with US passports, so there would be no reason for anyone to suspect that you aren't a USC, and nobody (related to the sale of a house) would/ should ask for evidence of your visa status.
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