# long-time expats relocating to U.S--tax questions!



## jmack (Apr 2, 2011)

Hello,
We are currently living in Singapore and prior to that Sweden and have been out of the U.S. for approximately 8 years. We are now relocating to Texas due to a new job offer. We own a home in Oregon that we have not lived in since 2003. We are trying to understand the tax implications if we should sell our home and immediately purchase another one in Texas--do we qualify for any exclusions in the tax on capital qains? Is it better for any tax reasons for us to move to Texas and rent a home, planning to sell our home in tax year 2012? Our heads are swimming a bit with all of the logistics of our move back, anticipating a bit of culture shock and wondering whether we will fit in! Any advice will be MUCH appreciated! Thank you kindly!
J Mack


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## Guest (Apr 2, 2011)

Good question for a CPA or tax attorney, but I believe that in order to sell your old house and avoid taxes on up to $250k in gains, you must have lived in that house for 2 out of the 5 years prior to the sale.

If you have rented out this house while you were abroad, you could do a 1031 exchange for a different property in Texas, but you couldn't live in it initially. You would have to rent out the new property for at least 2 years, and then you could maybe convert it to your primary residence.

Your best choice right now may be an investment in an hour's time with a good CPA in the US who knows real estate issues.


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## Bevdeforges (Nov 16, 2007)

As ****** Carlos said, in order to avoid any payment of capital gains, you would have to have lived in the house (as your primary residence) for two of the last 5 years prior to the sale. Also, the fact that you've been renting it out will complicate the basis calculation, since you must apply depreciation to the original purchase price, whether or not you took depreciation when reporting any rental income on the place.

Given the current real estate market, you may do just as well to hold onto the property in Oregon for a while to see how the market shakes out, cause things aren't real good yet.
Cheers,
Bev


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## jmack (Apr 2, 2011)

Thank you both for your answers! I guess the a good U.S. CPA or tax attorney would be worth our time. We would probably only be interested in waiting for a year before selling our home. We originally bought it in 1997 in a very desirable Portland neighborhood. As far as I can tell we have lost value on the home but we could still likely sell it for $180,000 (and that's conservative!) over the price we paid for it. Sooooo, will the real estate market recover enough to compensate for the high rental prices that we will be paying in Texas where we're going i.e. $2500-$3000/month? My guess is probably not but I'm not a real estate expert by any means! Anyone have a GOOD recommendation for a U.S. based CPA or tax attorney? We've been out long enough and the company my husband works for has taken care of all of our tax needs during our expat contracts that we have no connections whatsoever stateside in this area!


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## Bevdeforges (Nov 16, 2007)

Frankly, waiting a year before you sell the property won't do any good if you aren't living in it. And if you've been renting it out in the meantime, your gain on the sale will be higher than that because of the depreciation.

You'd probably do best to find a CPA, tax attorney or enrolled agent in the area in which you'll be living. Ask around among neighbors and co-workers, because there are tons of tax advisors and tax preparers out there (all pretty busy right now with the April 15th deadline approaching). You'll get more help if you wait until their busy period is over and you can discuss tax planning calmly and rationally (and to get a sense if this is the person you want to deal with).
Cheers,
Bev


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## twostep (Apr 3, 2008)

jmack said:


> Thank you both for your answers! I guess the a good U.S. CPA or tax attorney would be worth our time. We would probably only be interested in waiting for a year before selling our home. We originally bought it in 1997 in a very desirable Portland neighborhood. As far as I can tell we have lost value on the home but we could still likely sell it for $180,000 (and that's conservative!) over the price we paid for it. Sooooo, will the real estate market recover enough to compensate for the high rental prices that we will be paying in Texas where we're going i.e. $2500-$3000/month? My guess is probably not but I'm not a real estate expert by any means! Anyone have a GOOD recommendation for a U.S. based CPA or tax attorney? We've been out long enough and the company my husband works for has taken care of all of our tax needs during our expat contracts that we have no connections whatsoever stateside in this area!


Where in TX will you be renting?


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