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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16547
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hello, I moved to the US in 2005. I own an apartment in Russia

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Hello,
I moved to the US in 2005. I own an apartment in Russia which I plan to sell in the near future. I lived in the apartment for about a year before I moved.
Based on Russian tax law I don't have to pay any taxes on sale or income as I owned apartment for over a year. It also said in the taxation law that I don't have to report the money I received.
I want to do everything legally and wire money from the sale to my bank account in the US.
My question is. How am I supposed to report it in the US? How to do it so I don"t get hit by it too much? Is there an agreement between Russia and US about double taxation?
I would sell apartment for $90,000, I bought it for $20,000. I owned apartment for 9 years.
I have green card.
Thank you in advance,
Ira
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

If you lived in your house in Russia for 2 out of the last 5 years, then you can exclude from gross income your capital gain. You would report the transaction on Schedule D and underneath your calculation of the gain you would write "excluded under section 121."

If you did not live in this house for two out of the last five years, you would have to pay capital gains tax on the transaction.

Please let me know if you have further questions. Thanks for using JustAnswer.com and have a happy, and safe, 2013.


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You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Customer: replied 3 years ago.

is it supposed to be 2 out of last 5 years (I moved here in 2005) or any 2 years while I was the owner of the apartment?


also, is there any regulation about Russia-USA tax agreement? Why is it if Russia doesn't see it as an income - US still sees it as one?


Also, would I have to pay taxes for the difference of $90000-$20000 = $60000? What is the tax rate for the state of CT? Will I have to prove that I purchased apartment for $20000 by providing documents and will I have to provide sale price as well? It's all shows prices in RUB, do I need to do official translation for this purpose?


 

Thank you for your question. The rule is you had to live there two out of the last five years. Not two years while the owner of the apartment.

The US-Russia agreement is there to eliminate double taxation. Therefore, if you're not taxed in Russia, then you can still be taxed in the United States. You would pay capital gains tax which has a rate of 15% if your income is below $400,000 per year and 20% if your income is above that amount.

You need to have, for your own records only, the purchase price and sales information. You do not have to furnish this to the IRS unless they ask for further information in the event of an audit. You would need, at that time, to have an official translation. Therefore, it doesn't hurt to get this now so that you have it in the future.

Please let me know if you need any other additional information. Thanks again for using JustAnswer.com and have a happy, and safe, 2013.


** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO XXXXX ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Customer: replied 3 years ago.

would it be $400,000 per household income or my income only? My income is very low, but household income might be high. we file taxes together with my husband.

Thank you for your follow up. The $400,000 would be for your household income as you would file your tax with your husband.

Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a happy, and safe, 2013.


** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO XXXXX ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

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Customer: replied 3 years ago.
The only thing was that when I went to see 2013 tax changes it was $450,000 for joint filing, not $400,000