Sale gain on home abroad increased by dollar's decline
Article Abstract:
The US First Circuit Court held in the 'Quijano' case that gain on the sale of a residence in the UK should be determined by employing the dollar-pound exchange rates on both the date of purchase and the date of sale. The taxpayers bought a residence in the UK for 297,000 pounds sterling while working and living there. The acquisition price as well as renovations were funded via a mortgage loan in pounds. They eventually sold the residence for 453,000 pounds and retired the mortgage loan. The dollar-pound exchange rate changed from $1.49 to one pound on the purchase date to $1.82 to one pound on the sale date. The drop in the dollar against the pound had raised the dollar gain of the taxpayers but had resulted in a loss when their mortgage was paid off with costlier pounds. The court did not recognize the loss on the mortgage, however, since the borrowing was a transaction independent from the purchase and sale of the residence.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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'Buying down' may benefit some home sellers despite tax
Article Abstract:
Taxpayers who sell a home at a profit have a choice between paying a federal income tax and delaying it or never paying it at all. Under Sec. 1034, taxpayers who have sold a personal residence for a profit can postpone recognition of the gain if they acquire a new personal residence that is priced at least as much as the adjusted sales price of the old home. Certain time limitations also apply. In addition, taxpayers older than 55 years old are allowed under Sec. 121 to permanently not recognize the first $125,000 of gain. Therefore, taxpayers may never have to recognize the gain for income tax purposes by delaying gain recognition on the sale of residence until they are 55 years old. However, tax advisors should be aware that immediately recognizing gain and paying the corresponding tax may be more beneficial than postponing payment. Guidelines for taxpayers making this option are provided.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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New law excludes gain on sale of residence
Article Abstract:
The revamped Section 121 of the Taxpayer Relief Act of 1997 excludes gain realized on the sale or exchange of a principal residence. The new law offers taxpayers with an exclusion of as much as $250,000. Recordkeeping prerequisites for majority of taxpayers are now more simple.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
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