US taxation of change of currency valuation from Great
This is a multi-part message in MIME format. ---------------------- multipart/alternative attachment 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, = Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, = Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, = 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, = Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, = Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, = New Jersey, New Mexico,New York, North Carolina, North Dakota, Ohio, = Oklahoma, Oregon. Pennsylvania, Rhode Island, South Carolina, South = Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, = 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 ---------------------- multipart/alternative attachment An HTML attachment was scrubbed... URL: http://www.centa.com/CEN-TAPEDE/centapede/attachments/d7573c55/attachment.htm ---------------------- multipart/alternative attachment--
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