2 ms·
The IRS does not consider a refinance (even a cash-out refinance) to be a capital gain. The IRS also allows for 250K (500K if married) of tax-free capital gains
by simulate-me 4y ago
The IRS does not consider a refinance (even a cash-out refinance) to be a capital gain. The IRS also allows for 250K (500K if married) of tax-free capital gains on the sale of a primary residence. Maybe you misunderstood your friends’ situations.
- tristor 4y agoThis is only true for a primary residence located in the US. If it’s a foreign asset, it’s taxed normally. The IRS deeply screws expats.
- simulate-me 4y agoI just looked this up and you're right. If you're subject to the expatriate tax then you're automatically disqualified from the exemption. From my reading, it seems like there is a small loophole. You can sell a foreign property if you move back to the U.S. and meet all the other primary residence conditions.
- nsteel 4y agoExactly. And what's even more brilliant is that it entirely depends on the exchange rates at the start and end of the period. So a zero gain (or even a loss) over that period in the UK can still result in US tax owed.