# American resident in Dubai, have US Tax question



## v777 (Sep 30, 2010)

yes unfornunately the 'biggest' benefit of ALL american is that they are Taxed anywhere in the world.

Anyway, we are thinking of buying a apt in Dubai and moving in. Most probably we shall have to obtain finance (long term mortgage) from a Dubai Bank.

So my UAS Tax questions are :
a) Do I need to declare/list the aprtment on my US Tax return ?
b) If yes, then what about Loan interest, maintenace fees other expenses, Do I itemise them as deductions ?
c) What happens in a few years, after the loan is paid off and we sell the place ? Is entire amount taxable as capital gains ?

Is there any other American that can advise me ? Much appreciated !
Regards
V777


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## Bevdeforges (Nov 16, 2007)

Well, the "good news" for a change on the US tax front - you can treat your apartment in Dubai (or anywhere else) exactly like you would your apartment in the US. Means that you can deduct your mortgage interest and all just like back home. 

The one complication is that you have to apportion your interest (and other) deductions between your "exclusion income" and the rest of your income. Roughly speaking, that means if you have $10,000 in mortgage interest to deduct, and you have $180,000 in income, you only get to deduct half the mortgage interest from the taxable part of your income because the first half comes out of the $90,000 exclusion. (All numbers are approximate.)

Check the instructions for the form 2555 - you may be able to claim some of the expenses as "housing allowance" in addition to your earned income exclusion, but the rules on that have changed recently and I'm not terribly current on housing allowance these days. Other than that, you can't deduct any housing expenses that you wouldn't normally deduct in the US on your mortgaged home.

When you sell the place, you're entitled to exclude the first $250K or $500K (depending on your filing status) of the gain, as long as you meet the requirements to claim the apartment as your primary residence at the time of the sale.

Not sure exactly how to answer part a - you don't actually declare the purchase of a property on your US income taxes. When you start taking the mortgage interest deduction, they'll figure out that you have bought a place, though.
Cheers,
Bev


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## v777 (Sep 30, 2010)

*Thank you so much...YOU ARE SUPER !...one more question*

Do I have to file US income Tax even after I retire OUTSIDE THE US and have minimal income ONLY from my savings,(I have been living outside US for 35years and have NO PLANS to return) ? 

Will I have to pay Tax on my life savings (deposited in a foreign Bank) after retirement ?

Thank you
V777





Bevdeforges said:


> Well, the "good news" for a change on the US tax front - you can treat your apartment in Dubai (or anywhere else) exactly like you would your apartment in the US. Means that you can deduct your mortgage interest and all just like back home.
> 
> The one complication is that you have to apportion your interest (and other) deductions between your "exclusion income" and the rest of your income. Roughly speaking, that means if you have $10,000 in mortgage interest to deduct, and you have $180,000 in income, you only get to deduct half the mortgage interest from the taxable part of your income because the first half comes out of the $90,000 exclusion. (All numbers are approximate.)
> 
> ...


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## v777 (Sep 30, 2010)

*Thank you so Much...one more question*



v777 said:


> Do I have to file US income Tax even after I retire OUTSIDE THE US and have minimal income ONLY from my savings,(I have been living outside US for 35years and have NO PLANS to return) ?
> 
> Will I have to pay Tax on my life savings (deposited in a foreign Bank) after retirement ?
> 
> ...


You are fantastic


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## Bevdeforges (Nov 16, 2007)

v777 said:


> Do I have to file US income Tax even after I retire OUTSIDE THE US and have minimal income ONLY from my savings,(I have been living outside US for 35years and have NO PLANS to return) ?
> 
> Will I have to pay Tax on my life savings (deposited in a foreign Bank) after retirement ?
> 
> ...


Absolutely, positively, as long as you remain a US citizen you must file US Income Taxes no matter where you live - as long as your worldwide income from all sources exceeds the filing threshold for your filing status. (The filing thresholds are in the first few pages of the instructions in your tax booklet.) Retirement doesn't make any difference, nor does the source of your retirement funds. After age 65, however, you are accorded a slightly higher threshold unless you file as married, filing separately (the usual case for an American married to a non-resident alien).

There is no tax on your savings, other than on the interest paid on that savings during the year. But don't forget to file the Treasury forms for all your foreign bank accounts if the total of all foreign accounts exceeds $10,000 at any point during the year. 
Cheers,
Bev


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## vincetruong (May 10, 2009)

With the HIRE act being passed earlier this year, you also report foreign bank accounts, securities and financial accounts when filing your taxes when the aggregate value is over $50,000. this is different than the FBAR that goes to the Treasury and is not part of tax filing.


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