Selling House In Thailand: U.S. Tax Reporting Laws

[JerryO]

I'm interesting in selling a house in Thailand, then buying a house with that money in another country. Am I required to report the sale to the U.S. tax IRS? I presume if I do, I'll have to pay some capital gains taxes. I would prefer to sell the house in Thailand, and send the proceeds directly to a bank in the other country where the new house will be bought. Any thoughts/suggestions on the best way to do this? Thanks!

[Jingthing]

If your Thai home was your primary residence for long enough, you can report this and not owe any US taxes. Surely though, such an event will trigger the SERIOUS requirement that you file an FBAR to the Treasury department (massive penalties if you fail to do so if caught), so if you do that, they'll know something is going on.

http://www.escapefromamerica.com/2011/03/tax-rules-when-you-own-and-rent-property-abroad/

If the property was used for the 2 years during the previous 5 years prior to sale as your personal primary residence (you must actually live in it full time during that period), you may be able to exclude up to $500,000 of the gain from your US income taxes under the exclusion allowed for sales of personal residences. If the property was rented out part of that time, some of the gain on sale will be subject to US income tax.

Edited May 24, 2011 by Jingthing

[gregb]

If your Thai home was your primary residence for long enough, you can report this and not owe any US taxes. Surely though, such an event will trigger the SERIOUS requirement that you file an FBAR to the Treasury department (massive penalties if you fail to do so if caught), so if you do that, they'll know something is going on.

http://www.escapefromamerica.com/2011/03/tax-rules-when-you-own-and-rent-property-abroad/

If the property was used for the 2 years during the previous 5 years prior to sale as your personal primary residence (you must actually live in it full time during that period), you may be able to exclude up to $500,000 of the gain from your US income taxes under the exclusion allowed for sales of personal residences. If the property was rented out part of that time, some of the gain on sale will be subject to US income tax.

The only way to take this exclusion on a HOUSE in Thailand is if the Thai house was in the name of your legal wife. If it was in a company name, then technically you are renting the house from the company, and you do not qualify. Of course, if the house is in the name of your wife, then why not simply leave the money in her account, and let her wire the money to the new country? Thais are allowed to purchase homes overseas. Avoid the US tax issues and FBAR reporting altogether.

With the sale of a house by a company, you have no choice. The money is coming back to you not from the proceeds of the house sale, but from either the valuation of the company stock, or from a distribution to shareholders. Again though, you can leave the money in the Thai company, and have the Thai company purchase the new house overseas. Still avoid the US taxes. Although not the FBAR report in this case, as you would have control over the company finances.

With a condo in your own name, then the advice Jingthing gives above is correct. You can claim the exemption provided the condo was your primary residence. FBAR report is again crucial.