If you bought your home in the U.S. with an out-of-state real estate transaction, you could be paying an extra $1,900 per month on your mortgage.
The federal estate taxes are only assessed on the value of the property when you die, so if you’re thinking about selling, there are a few tricks to consider.
Read moreThe federal estate is not taxed until the person who bought it dies.
But if you have property that was purchased in the United States before you were born, you may have to pay an estate tax on that property.
The Internal Revenue Service (IRS) doesn’t issue property tax records, but you can get a copy of the tax return from the IRS, which can be obtained from the Taxpayer Identification Number (TIN).
If you’re a nonresident alien, you might have to provide a social security number (SSN) for each person you had an out of state transaction with.
You also must pay any taxes on your property.
So how can you avoid a tax bill if you buy your home out of the country?
First, the IRS will ask for the full amount of your out- of-state purchase, so it’s a good idea to include any sales proceeds in your calculation.
You can use that money to pay down your mortgage, get a new car, or to buy a new home if you bought it before the date of your death.
Second, if you own the home, you can file a Form 1040NR for the property, and you’ll have to include the IRS Form 1055NR for each year you’ve lived in the home.
The IRS can use those numbers to calculate the value you owe on the property.
If you sold the home before the filing deadline, you’ll need to calculate your out of pocket value.
Third, if the property is owned by a foreign country, you should check with your tax office to see if the country imposes a foreign tax on out- or in-country purchases.
If so, you’re still responsible for paying the taxes.
The federal government provides guidance for these situations, but if you are in the process of buying or selling your home, and have not already done so, it’s important to consult with an attorney.
If you need help, call the Tax Help line at 1-800-955-5463.
The Tax Help Line is staffed 24 hours a day, seven days a week.
You may also contact the U-Haul Office at 1.866.955.5463 or the Uphold Taxpayer Assistance Line at 1-(877) 955-2620.
The IRS has more on the tax process.