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If you have a foreign property for personal use, you can deduct the first $375,000 of qualified mortgage debt for tax year 2022 on your first and second homes (or $750,000 if filing jointly).
The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), enacted as Subtitle C of Title XI (the "Revenue Adjustments Act of 1980") of the Omnibus Reconciliation Act of 1980, Pub. L. No. 96-499, 94 Stat. 2599, 2682 (Dec. 5, 1980), is a United States tax law that imposes income tax on foreign persons disposing of US real property interests.
The same principle holds true for tax-deferred exchanges or real estate investments. As long as the money continues to be re-invested in other real estate, the capital gains taxes can be deferred. Unlike the aforementioned retirement accounts, rental income on real estate investments will continue to be taxed as net income is realized.
However, taxpayers pay no tax on income covered by deductions: the standard deduction (for 2022: $12,950 for an individual return, $19,400 for heads of households, and $25,900 for a joint return), or more if the taxpayer has over that amount in itemized deductions. Amounts in excess of this are taxed at the rates in the above table.
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You can sell your primary residence and avoid paying capital gains taxes on the first $250,000 of your profits if your tax-filing status is single, and up to $500,000 if married and filing jointly.
All states with income taxes impose a similar withholding obligation on wages paid to nonresidents by businesses operating within the state. [1] The taxes withheld must be treated as prepaid taxes, with final taxes imposed at the same rate and under the same computations for residents and nonresidents.
Selling a home can put a large sum of money in your pocket but there's one important thing to consider: Taxes. Whether the sale of a home is taxable or not can depend on the amount of the gain ...