Repatrioting Funds Back To Us After Sale Of Condo In Bkk

[gtrinbkk]

I will be closing the sale of my condo here in BKK in a few weeks. I would like to transfer about 25k US back to my account in the states after closing.

Original funds brought into Thailand for purchase were 38k US. Still have tor tor 3 showing this.

My question is this: What will the tax consequences be if I do this? I have worked here, not in the states for 4 years and intend to file the foreign earned income exclusion for tax year 2010. Have not set foot in the states for nearly 1.5 years. I never reported the purchase of property here as I didnt think it necessary unless getting rent income here.

Will this transfer change my tax situation at all? Ok to send it in one big lump or break it up?

Thanks!

[taxout]

If you have taxable gain, then it's reportable to the IRS.

However, you may qualify for a special rule which excludes up to $250,000 of gain (in the case of a single taxpayer) that arises from the sale of a principal residence. As with all tax rules, there are complexities, but the basic rule is that the property must have served as your principal residence for at least 2 of the previous 5 years, though the 2-year period does not have to be continuous.

You'll find details here, and as I said, note all the ins-and-outs of the rule.

http://www.irs.gov/p.../p523/ar02.html

There's no rule restricting a foreign residence from qualifying for the exclusion, but remember that your cost and gain will be calculated in US dollar terms measured at the corresponding exchange rates when you bought and sold the property.

Whether you transfer funds to the US or not is irrelevant to your tax liability.

[maxman71]

Another item to consider: Do you have bank accounts in Thailand (or elsewhere outside the US), did the aggregate total balance of all your offshore accounts exceed USD equyivalent of $10,000 for even only one day in the last few years, and if so, did you report the existence and high balances of these accounts using the FBAR (Foreign Bank Account Reporting) form, and also check the appropriate box on your 1040 (I think it is on Schedule that you have foreign bank accounts?

If you meet the reporting threshold and did not report the accounts, the transfer of the USD 25K will trigger your receiving bank to report the incoming funds to the IRS, and the tax ramifications of the capital gain on your condo sale could be the least of your problems.

[Jingthing]

For the money from the condo sale this year, which will obviously be over 10K USD, I don't see a problem with that, just be sure to file your FBAR to treasury by June 30, 2011 which reports on the year 2010.

[maxman71]

For the money from the condo sale this year, which will obviously be over 10K USD, I don't see a problem with that, just be sure to file your FBAR to treasury by June 30, 2011 which reports on the year 2010.

There won't be a problem xferring the money, but transfers over USD 10K will prompt the US receiving bank to report the transaction to the IRS. If the guy has not reported the existence of his bank accounts overseas from where he is xferring the money, the IRS could look into it. They are cracking down on unreported offshore accounts, unreported interest from those accounts, etc. That's what I am referring to.

[taxout]

It does sound as if the OP must have met the $10,000 threshold at least in the year he brought funds in to buy the property.

Note that the OP must "own" the property to qualify for the $250,000 exclusion. If the property was held indirectly in some fashion, there might be a question whether he's the owner for purposes of the exclusion.

[Naam]

It does sound as if the OP must have met the $10,000 threshold at least in the year he brought funds in to buy the property.

Note that the OP must "own" the property to qualify for the $250,000 exclusion. If the property was held indirectly in some fashion, there might be a question whether he's the owner for purposes of the exclusion.

if that is the case it should take care of any tax liabilities. why the OP wants to convert precious Thai Baht into US-Dollars and send it to a jurisdiction where the IRS claws dominate is...

[taxout]

No, you could be taxed on the gain even though you're not the "owner" of the house for purposes of the exclusion.

Imagine your inlaw holds title to the house and agrees by contract to hand over any gain from sale. Maybe you're the owner for purposes of the exclusion maybe not, but you certainly owe tax on any income you receive under that contract.

[asiawatcher]

For the money from the condo sale this year, which will obviously be over 10K USD, I don't see a problem with that, just be sure to file your FBAR to treasury by June 30, 2011 which reports on the year 2010.

There won't be a problem xferring the money, but transfers over USD 10K will prompt the US receiving bank to report the transaction to the IRS. If the guy has not reported the existence of his bank accounts overseas from where he is xferring the money, the IRS could look into it. They are cracking down on unreported offshore accounts, unreported interest from those accounts, etc. That's what I am referring to.

I would set up and HSBC account with internet facility and transfer in small tranches into your US accounts and only when you need it. No point ringing alarm bells and letting Uncle Sam screw you for your hard earned gains especially if you have not reported your foreign bank accounts! You may also wish to change around USD9,000 into travelers checks and carry them in. They are safe, if you lose them they are replaceable and under 10k you do not have to declare on the way in. That leaves you only small amounts offshore and easier to transfer. Good luck!

[taxout]

This is really bad advice. Really, really bad advice.

Structuring transfers to avoid the reporting requirements is itself illegal. See 31 USC Sec. 5324. The maximum penalty is five years' imprisonment.

http://www.law.cornell.edu/uscode/31/usc_sec_31_00005324----000-.html

[DoubtingThomas]

You can legally leave Thailand with $20,000. Take a wad of $100's in your pocket and declare it as you enter the US. Tell them you sold your car or you accumulated it in your bank account. They don't care. I did it and as I was filling out the paperwork I asked them if they wanted to see the money. They weren't interested. Let's get real here. We're talking silly money. They're just not interested.

[taxout]

The best way to insure that they're "not interested" is to play straight and not play games. Don't structure your transfers and declare your cash if it's over the limit.

As to whether $20,000, say, is "silly money," if it seems to come out of nowhere, any reasonably capable tax inspector will wonder if there's more where that came from.

Don't forget that Governor Spitzer became ex-Governor Spitzer because a bank filed a Suspicious Activity Report over a $5,000 transfer.

http://gawker.com/5520737/eliot-spitzer-suspicious-activity-report

[DoubtingThomas]

The best way to insure that they're "not interested" is to play straight and not play games. Don't structure your transfers and declare your cash if it's over the limit.

As to whether $20,000, say, is "silly money," if it seems to come out of nowhere, any reasonably capable tax inspector will wonder if there's more where that came from.

Don't forget that Governor Spitzer became ex-Governor Spitzer because a bank filed a Suspicious Activity Report over a $5,000 transfer.

http://gawker.com/55...activity-report

Well, no doubt someone was looking out to get the Governor. I'm sure that's not the case with the OP. And I'm sorry, but $20k is silly money; if it's not, you (in general, not taxout in particular) are in serious trouble.

Going by my experience they don't care. I said I'd sold my car (I had) but they asked for no evidence at all. Also, saying you're just repatriating money from your bank account is perfectly reasonable too. $50k might be a different kettle of fish, but you can't legally walk out of Thailand with that much anyway.

It's all moot anyway unless he made any adjusted gross profit on it or it was not his primary residence for a couple of years. Since he claimed the overseas earning exemption it must have been his primary residence by definition. I think he's worried over nothing.

[Naam]

No, you could be taxed on the gain even though you're not the "owner" of the house for purposes of the exclusion.

Imagine your inlaw holds title to the house and agrees by contract to hand over any gain from sale. Maybe you're the owner for purposes of the exclusion maybe not, but you certainly owe tax on any income you receive under that contract.

agrees by contract to hand over any gain from sale and has sent a certified, authenticated, notarised and consularised copy of said contract to the IRS then...

[DoubtingThomas]

Lot's of b*llocks in this thread especially considering nobody knows the cost basis, the selling price, whether the OP owns a house elsewhere or even whether he has perhaps already busted his $250k gain allowance on some other deal. Agree with Naam:ph34r:

Dunno what the emoticon means but it looks like I feel!

[taxout]

"Lot's of b*llocks in this thread."

Yes, almost entirely from your posts.

[Naam]

Agree with Naam Dunno what the emoticon means but it looks like I feel!

it this case it means: input by "i am taxier than thou" artsmasses highly appreciated

[gtrinbkk]

Thanks for all the responses.

Basically, here are the specifics. The condo was purchased for about 38k back in 2003, sales price will net about 44k at today's exchange rate. It has been my primary residence for the last 7 years and I have been the sole owner. In terms of baht I'm selling at a loss considering the fx rates now, but in US$ there is a modest gain, but I do qualify for the 250k exclusion correct?

As far as reporting of foreign accounts, is this a new thing? Never saw any question regarding FBAR over those years when I filed my taxes, maybe I missed it somehow. Either way, the only time my account in Thailand has ever exceeded 10k was when transferring for the purchase back in 2003 for just a few days.

I'm not trying to evade any tax responsibility, just dont want any surprises come tax day

Thanks!

[Jingthing]

Thanks for all the responses.

Basically, here are the specifics. The condo was purchased for about 38k back in 2003, sales price will net about 44k at today's exchange rate. It has been my primary residence for the last 7 years and I have been the sole owner. In terms of baht I'm selling at a loss considering the fx rates now, but in US$ there is a modest gain, but I do qualify for the 250k exclusion correct?

As far as reporting of foreign accounts, is this a new thing? Never saw any question regarding FBAR over those years when I filed my taxes, maybe I missed it somehow. Either way, the only time my account in Thailand has ever exceeded 10k was when transferring for the purchase back in 2003 for just a few days.

I'm not trying to evade any tax responsibility, just dont want any surprises come tax day

Thanks!

If this was your primary residence for that period of time, then I DO think you are indeed eligible for the tax exclusion on the profit (if there is a profit).

FBAR is not new! You do not file FBAR with your IRS return. It is a SEPARATE requirement, with a separate deadline, and your file to the treasury department. The deadline is June 31 of every year for the previous year. If an aggregate of your foreign accounts goes over 10K USD for even one second, you are required to file for that year. The brevity of time in 2003 is irrelevant. I will leave it to a tax expert to determine whether that 2003 event may bite you. I do think FBAR was in effect in 2003, but I don't know exactly when it did start, can anyone say that?

Also note, FBAR can only be filed on paper. No way to efile an FBAR.

You may also ask, why do US expats get so concerned about FBAR? The answer is that the FINES that they can legally enforce for non-compliance are massive and shocking. How often they actually enforce these fines is something that would be difficult to determine, but they certainly have the legal power to do so.

[taxout]

FBAR requirements have been in place for over 25 years.

Form 1040, Schedule B, Part III asks whether you have any foreign bank accounts and reminds you of the FBAR requirements. You're supposed to file Schedule B and answer this question "Yes" whenever you have a foreign bank account and meet the FBAR filing test, even though you may not otherwise be required to file Schedule B because your interest and dividends don't meet the $1,500 threshold.

[taxout]

As to what happened in 2003, if you wired the funds from the US to the seller's Thai account, then I don't believe you have an FBAR issue. If you wired them first to your account in Thailand, and then transferred them somehow to the seller, your account met the $10,000 test in 2003 -- it's an "at any time test" -- and you had a FBAR and Schedule B obligation.

[Jingthing]

taxout, I have a related question for you. When I bought my Thai condo, I wired the money into my real estate broker's account and he transferred the money to the seller. It never touched my Thai bank account at all. I did receive a foreign exchange document from the bank about the transaction, that's a separate issue for me whether that will be honored if I ever need to wire a sale proceeds out of Thailand.

So my tax question is this. Given that my condo buying monies never touched an account with my name on it, can I assume I did NOT have an FBAR filing obligation from the year I bought the condo (considering that transaction alone)?

[taxout]

FBAR applies not only to accounts in your name, but also to accounts in which you have a "financial interest," including accounts over which you have "signature or other authority."

According to the 2009 FBAR instructions,

"A person has signature authority over an account if such person can control the disposition of money or other property in it by delivery of a document containing his or her signature . . . Other authority exists in a person who can exercise comparable power over an account by communication with the bank or other person with whom the account is maintained . . . either orally or by some other means."

In your case, you didn't have authority over the account as such, only over certain funds in it. Offhand, I don't know for certain whether your situation might nonetheless have run afoul of FBAR. But let's say that instead of a single transaction, your broker did this for you on many occasions. Does FBAR have that big a loophole? I'd be very surprised if it did. Sometimes there's learning out there on issues like this, but I'm not able to seriously research this now.

Note that the FBAR instructions changed a bit in 2008, and the earlier instructions may have been slightly different.

[Jingthing]

Thanks for that. Maybe I will find out someday, maybe I won't.

In any case, I certainly wouldn't suggest buying a condo here the way I did. It was risky, but the broker did prove honest. I did have reason to trust him, he is a very public figure in town with a good reputation, but again, you never know. I don't remember all the details of why I did it this way except it had something to do with the fact that I was out of Thailand when the money was wired and the sale was effected (so I gave the broker the right to close it), but it certainly wasn't to avoid FBAR. (Tell it to the judge, ha ha.)