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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7727
Experience:  15years with H & R Block. Divisional leader, Instructor
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I am from europe, visiting Florida on a 6 month Visa. I

Customer Question

I am from europe, visiting Florida on a 6 month Visa.

I have a US LLC, registered in Wyoming.
The LLC owns 2 residential properties , both in Florida .

I want to sell one or both.

The house I want to sell now will be sold for between 300 000 and 500 000.
I bought it for 300 000 in November 2012.
I have also invested in some costly upgrades.
My questions below will only be of interest if I make a profit:
.
Do I have to own the house/s for a certain time to reduce taxes?

Is there any tax if I reinvest the sales profit within a certain time frame?What are the rules for reinvesting ?, and does it matter if seller is as a foreigner or an LLC?

If I get a tax ID , does this imply that I have to file future taxes in the US every year even those years when I dont have any income here?

I have been told that a certain % of the sales price be withheld due to the fact that I am not a US Citizen?
does the time-owned factor influence the withheld amount?

Is there a way to legally avoid the withholding? What if the LLC owner hires a US citizen as director?

Will the withheld amount be payd back to me?
Would it be more beneficial for me to own the house in my personal name?


What are the rules if I rent one of the houses?


Other tax or legal concerns?


Please also advise me of the fees for your services.

Regards

Cato Aall
email:XXX@XXXXXX.XXX
Tel + 1(NNN) NNN-NNNN
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,
Do I have to own the house/s for a certain time to reduce taxes? Longterm holding of Capital Assets does have a better rate on tax. Longterm is 1 year and 1 day.
Is there any tax if I reinvest the sales profit within a certain time frame? There is but you may not have the sale happen in such a way that you receive the payment. What you are asking about is a 1031 Exchange. The rules are specific and there are timeframes involved.
If I get a tax ID , does this imply that I have to file future taxes in the US every year even those years when I dont have any income here? No it does not imply that you would have future tax.
I have been told that a certain % of the sales price be withheld due to the fact that I am not a US Citizen? does the time-owned factor influence the withheld amount? 10% will be withheld. Hiring a director would not chnage the fact

Robin D :

Will the withheld amount be payd back to me? Yes, if the tax were too much
Would it be more beneficial for me to own the house in my personal name?
It would not make a difference unfortunately because you are a Non US person

Robin D :

What are the rules if I rent one of the houses? You could count it as a business connected to the US and not have withholding on the rents. You would be required to file and report the rental income but could also be allowed to use the expenses and possibly have no rental income to pay tax on.

Robin D :

Please also advise me of the fees for your services. You only need to rate the answer as Ok, Good, or Excellent (my personal favorite). There would be nothing else you would have to pay to me.

Robin D :

I see you are in CHAT

Robin D :

Take a moment to read my response

Robin D :

then please respond

Robin D :

I can switch to Regular Q&A if you can not respond

Customer :

ok, so I guess need to hold it one year and one day, what are the tax rates on short term vs long term?

Customer :

since I have renovated two houses i have spent a lot of money on the renovation,can I deduct the renovation cost for one or both houses owned by the same LLC to reduce the taxes?

Customer :

what are the requirements of the 1031 exchange?I sell my house to one person with a profit, and buy another house from another person , will i need to reinvest the whole sales amount or only the profit?whats the timeframe?

Customer :

how long time does it take to get the witheld amount back? do they withhold 105 of salesprice or 10% of gross profit?

Customer :

if I obtain a work visa , will there still be a withhold of sales profit?

Customer :

will a work visa allow me to enjoy the same right as residents have, to sell free the house free of tax up to a profit of 250 000 if lived in the house 2 out of last 5 years?

Expert:  Robin D. replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Robin D. replied 1 year ago.

Customer :

ok, so I guess need to hold it one year and one day, what are the tax rates on short term vs long term?

Generally, net capital gain is taxed at rates no higher than 15%.
Expert:  Robin D. replied 1 year ago.
Customer :

since I have renovated two houses i have spent a lot of money on the renovation,can I deduct the renovation cost for one or both houses owned by the same LLC to reduce the taxes? The renovations would add to the basis or cost. This would make the gain less

Customer :

what are the requirements of the 1031 exchange?I sell my house to one person with a profit, and buy another house from another person , will i need to reinvest the whole sales amount or only the profit?whats the timeframe? Any amount you do not reinvest but receive yourself would be taxable. The taxpayer may not receive the proceeds or take constructive receipt of the funds in any way, without disqualifying the exchange.

Customer :

how long time does it take to get the witheld amount back? do they withhold 105 of salesprice or 10% of gross profit? They will withhold on the sales price. The refund could take months.

Customer :

if I obtain a work visa , will there still be a withhold of sales profit? Yes, as long as you are a nonresident alien

Expert:  Robin D. replied 1 year ago.
ACUSTOMER-aa6h3y8c- : will a work visa allow me to enjoy the same right as residents have, to sell free the house free of tax up to a profit of 250 000 if lived in the house 2 out of last 5 years?

Being a RESIDENT ALIEN would allow for the same treatment. Not a work VISA.

You would be taxed on your worldwide income just like a US citizen.

Your positive rating is always thanks enough.

If you could also participate in the very short survey that Just Answer will send you by e-mail I would appreciate that very much.
I really enjoyed working with you – please feel free to request me again when you come back to ask another question.
Customer: replied 1 year ago.

I understand, but what is the different rate for short term profit vs long term profit? and how is the 1 year and 1 day counted, contract date or closing date?


 


what is renovation cost of both houses exceeds the profit on one house?


 


how to become a resident alien?


 


1031. how not to receive the funds for a sale before reinvesting? must I keep it in escrow until I buy a new house?

Expert:  Robin D. replied 1 year ago.
The closing date is the start and the ending dates. If the renovation costs are added to original costs so if they make the cost (basis) more than the sales price there is no gain and it is a loss.
An individual that is in the US for more than the days needed would be a resident alien for the tax year. This is called Substantial presence.

To meet the substantial presence test, you must have been physically present in the United States on at least:

  1. 31 days during the current year, and
  2. 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count:
    • All of the days you were present in the current year, and
    • One-third of the days you were present in the first year before the current year, and
    • One-sixth of the days you were present in the second year before the current year.
Short term gains are taxed at your regular rate of tax. Longterm are based on your total income and can be 15% to 20%
Expert:  Robin D. replied 1 year ago.
Sorry, I did not see this one too.
"1031. how not to receive the funds for a sale before reinvesting? must I keep it in escrow until I buy a new house?"
The 1031 exchange is very specific and can be complicated. Here as some of the basics:
Both the relinquished property and replacement property must be held for productive use in a trade or business or for investment. Property acquired for immediate resale will not qualify. The taxpayer's personal residence will not qualify.
Replacement property acquired in an exchange must be "like-kind" to the property being relinquished. All qualifying real property located in the United States is like-kind.
The relinquished property must be exchanged for other property, rather than sold for cash and using the proceeds to buy the replacement property. Most deferred exchanges are facilitated by Qualified Intermediaries, who assist the taxpayer in meeting the requirements of Section 1031.
The value of the replacement property must be equal to or greater than the value of the relinquished property.
The equity in the replacement property must be equal to or greater than the equity in the relinquished property.
The debt on the replacement property must be equal to or greater than the debt on the relinquished property.
All of the net proceeds from the sale of the relinquished property must be used to acquire the replacement property.
Once the money is deposited into an exchange account, funds can only be withdrawn in accordance with the Regulations. The taxpayer cannot receive any money until the exchange is complete. If you want to receive a portion of the proceeds in cash, this must be done before the funds are deposited with the Qualified Intermediary.
Expert:  Robin D. replied 1 year ago.
Another expert sent me this message:
"I think you need to ask specifically what tourist visa she's on......sounds like B1 or B2...in which case, everything you described is NOT allowed on that visa. Tourist visas usually do NOT clear people to have investment income, nor do they meet the substantial presence test, since many of them are limited to 182 days specifically. Please see below: (re B1....most popular tourist visa I do believe...but I would ask)"

As you already own the property I do not see how this would effects you.
My understanding is that you wish to lessen your tax requirement.
Expert:  Robin D. replied 1 year ago.
JACUSTOMER-aa6h3y8c- Last Viewed on 5/7/2013 at 1:03 PM

Did you need to follow up again before you rate the assistance?

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Robin D.
Robin D.
Tax Professional
7727 Satisfied Customers
15years with H & R Block. Divisional leader, Instructor