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Hello JA Customer,
Since you have not lived in the apartment in Russia for two out of the last 5 years, there is no way for you to claim a credit for the primary home exclusion. And reinvesting the money from the sale of a personal residence to purchase another personal residence does not qualify for any type of tax reduction or tax deferral.
Taxes will be due on any gain you have from the sale of this property, and the taxes are due in the year the property is sold. You would be better off to sell the apartments this year if you can while the long term capital gains tax rate is only 15%. If the sale does not occur until 2011, that tax rate increases to 20% and you will have additional tax liability.
The IRS will allow you to claim a credit for foreign taxes you may have to pay to Russia on this same transaction, but you do not qualify for any other type of reduction in your US tax liability, regardless of how the funds are used.
If there were other options available to you, I would certainly provide you with that information, but unfortunately you do not qualify for any exclusions or deferrals.
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Thank you very much. Unfortunately, it confirms my thoughts.
Thank you Vera for using JA. I wish I could have provided you with an alternative here.