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If a forefinger sells a property in the US, does he or she

Customer Question
you pay taxes on the...
If a forefinger sells a property in the US, does he or she you pay taxes on the gross sales, or just on the profit and what percentage. Thanks
Submitted: 8 years ago.Category: Tax
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Answered in 5 minutes by:
1/1/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hello cfran,

Is this foreign person residing in the US? If not, what country do they live in?

Does this person hold US citizenship or a green card?

What type of property was sold?
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Customer reply replied 8 years ago
Not Residing in the us.
The foreigner is a Bermudian, How just visits the US alot.
The Property is for investment. Intention is to buy and flip.
Tax Professional: jgordosea, Enrolled Agent replied 8 years ago
jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
Verified

Greetings,

The general rules for nonresidents of the US is that only US source is taxable by the US. For general information on taxation of nonresidents of the US see Taxation of Nonresident Aliens

Real property sales are reported on 2008 Form 1040 (Schedule D)

and on 2008 Form 1040NR

Complete information is available from Pubilcation 519 Effectively Connected Income :

"Gains and losses from the sale or exchange of U.S. real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. You must treat the gain or loss as effectively connected with that trade or business."

Gains realized by nonresidents on the sale of U.S. real property will be subject to a 10% withholding tax on the gross proceeds. Alternatively, a taxpayer may withhold 30% of the capital gains realized upon sale of the property. The 10% or 30% withholding are required to be made at the source.

I hope this helps for understanding the taxation of sale of real property in the United States by a nonresident.

Best wishes and happy new year.

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jgordosea
jgordosea
jgordosea, Enrolled Agent
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