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I bought a house (not main residence) in Chile, in 1992. The

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I bought a house (not main residence) in Chile, in 1992. The cost was 50,000 US$. I moved to the US in 2001. I would like to sell this property in 2013 for 450,000 US$. Question is: How much tax would I have to pay in the US? Is there a consideration to the fact that I moved to the US on 2001, and that year the house had a higher value than when I bought it in 1992?
Welcome, THANK YOU for using Just Answer. My goal is to help make your life...a little...LESS taxing.


Q: How much tax would I have to pay in the US?

A: Without knowing all of the particulars, such as how much was spent on qualified improvements, I can't give you a dollar amount at to how much you will pay in capital gains tax. Was this property a rental property, or a second home? The capital gains rate is either going to be 15% or 20%. If your income is $400,000, the rate is 20%.

Determining the actual gain differs if the property was a 2nd home, or a rental property.

If a rental property:

First of all, you will need to figure out the actual gain amount. To do this, you take the cost basis (what you originally paid for the property), and add the amounts spent on qualified improvements. You will also need to deduct depreciation taken if any. Once you determine the true cost basis, you can then determine how much your actual gain on the sale of the property would be.

Following is a link that provides you with step by step instructions on how to figure out the actual gain on the rental property.

http://homeguides.sfgate.com/calculate-capital-gains-tax-rental-property-7333.html

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If a second home, you can refer to IRS Pub 523:

http://www.irs.gov/pub/irs-pdf/p523.pdf


Please let me know if I can be of further assistance to you regarding this matter.

Thank you again for using JUST ANSWER.






Customer: replied 3 years ago.


Yes. I know I have to pay tax.


 


But I wanted to know if the rate is reduced, since I moved to the US on 2001, and that year the house had a higher value than when I bought it in 1992?

Hello again Alberto,

My understanding is that you moved to the U.S. in 2001. The FMV of the property was less when you purchased it then in 2001 when you moved here.

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You would take the original cost basis (the amount paid when you purchased it in 1992) and start from there. The fact that you came to the U.S. in 2001 does not affect the cost basis in the property. Whatever the capital gain rate is in the year that you sell the property is the rate that you will apply to you.

Let me know if this answers your question.
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