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If you sold the house for less than you purchased it for, then there is no capital gain and therefore no tax
As this is a personal use asset, no loss is allowed. So, you will not deduct a loss but you will not have a taxable gain, either
so the proceeds are essentially tax free.
All you need to do is simply wire the money from your account in Russia.
Also, I'm sorry but your requested professional is not online right now
However, as you pay US Tax in US currency you would have to translate the cost to US dollars. So yes, you would have to go back and determine how much 50 mln was worth in 1995 versus what 12 mln is worth today
If there was a gain, then you would have a capital gain regardless of whether or not you sent the proceeds to your wife. There is no way to side-step capital gains if the gains do exist.
As she is a resident for tax purposes, (based on the substantial presence test) she is taxed on her worldwide income.
However, as the US and Russia have an income tax treaty, according to Article 9, you would be taxed only in Russia on the sale of property situated there.
You can CLICK HERE to read more about that.
Do you have any further questions about this matter?
So, the botXXXXX XXXXXne is that if you had capital gains, it would be calculated by translating into US dollars the purchase price and sales price. However, since there is a tax treaty with Russia you will not be taxed in the US on the sale of property in Russia.
Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today
Thank you for the answer Megan,
I have a few follow up questions:
First, are you the professional I am going to be working on from now on or I should still expect an answer from the original Tax attorney I requested. This may not be an issue, I just like to understand how this works.
You will work with me. If you would rather work with the other professional, I can step aside and you can await a response from him
Okay, Based on numerous replies I have read on the forum from tax professionals, there exists responsibility for gapital gains on property sold in Russia. This seems to be at odds with the tax treaty you mentioned. Could you please clairfy?
You can review the tax treaty. Article 9 states that a resident of one contracting state that receives income from property situated in the other contracting state will be taxed in that other state
So you as a resident of the US will be taxed on the sale of your property in Russia in Russia
If you do not use the tax treaty benefits, then you would pay capital gains tax here.
Okay, from what I understand, the only requirement that would be my responsibility is a statement from the "russian IRS" that I paid taxes here?
You don't need a statement from them to claim the benefits.
And Russia is a contracting state?
Yes, the US and Russia are both contracting states
Ok, I read through the declaration. I will submit a excellent rating. Is it also possible to receive an opinion on this from the tax attorney I originally requested?
Yes, I will put the question back on the board after you rate, and he can grab it when he gets in.
Great. I appreciate your input and will await further communication from the attorney. Thank you for excellent service.
I inquired about my tax obligations is Russia and based on what I have learned, i am not subject to capital gain tax since the apartment was sold more than 3 years after purchase.
Am I still exempt from U.S tax even if I am exempt from taxes in Russia?
I was very satisfied with you prompt and comprehensive response.
Because what you advised me was so different from what was advised by the expert I originally contacted (http://www.justanswer.com/tax/0tdgr-pay-tax-when-sell-property-outside-usa.html), I would really appreciate a second opinion.
You mentioned that my response would be picked up by him but I haven't received anything yet. How can I receive some feedback?
I still haven't received any feedback from the other tax pro. What can I do?