I have a client whose brother is a Swiss citizen. He bought a ranch 7 years ago for 2 million and now has an offer to sell for 3 million. Due to the decline of the Swiss Franc he will lose money. Once converted. I have not found any way for him to lesson his US capital gain. Does anyone know of a way beside using closing cost.
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If brother is Swiss, and selling his property why is your client involved ?. Need details to help. -
My client is his sister, but she has dual citizenship, and I do her return which has Swiss income so she thought I might be able to help her and her brother. she also takes care of the property in the summer as well as being the realtor who will be selling the property for him.Comment
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Why would brother be paying US tax, if he lives in, and is a Swiss citizen.?Comment
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So what you are saying is. Since he is a Swiss citizen and bought the ranch as an investment, if he sells the ranch he does not have to file a us return and claim capital gain tax?Comment
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Selling real property in the U.S. results in U.S. source realized gain/loss. (gain in this case). Of course it is subject to U.S. tax.
If the Swiss franc has gone down in value compared to USD, then that would be more economic gain, not less.
No, there is no way to reduce his capital gain if he sold real property. Proceeds less expense of sale less adjusted basis equals net taxable gain."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
"That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe HowardComment
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You never said property was located in US. I believe the capital gain on sale of real estate for nonresident alien's is considered "effectively connected income", and may have deduction's and credits available. I am not experienced in that area, so you should research it, or maybe someone will commit.Comment
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You're right, I forgot how many ranches there are in Switzerland that are bought and sold for U.S. dollars (otherwise, why would the value of the franc matter?)
The OP did say this: "she [his tax client] also takes care of the property in the summer as well as being the realtor who will be selling the property for him."
See Pub 519 for a discussion of effectively connected income.
Last edited by Rapid Robert; 11-06-2024, 11:09 AM."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
"That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe HowardComment
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He only has the ranch as an investment. It produces no income.Comment
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I don't believe intent (investment or rental) has anything to do with it. If a nonresident alien sells real estate it is considered "effectively connected income", and you should look at pub 519 as Robert suggestedComment
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