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Non-resident alien and capital gain by selling primary residence

Up to 2006, my wife and I were residents in US tax-wise and filed/have to file 1040 jointly. We will be permanently going back to my country in Feb 2007 and will not come back to US as residents. We are not US citizens nor green card holders. We are now selling our primary residence where we lived for about 20 years. We will have capital gains which will be less than $500,000. We guess our tax status for

2007 will be non-resident aliens. I hope that we do not owe any tax on this capital gain just like US citizens do not. And, I hope that we do not have to file any thing such as 1040NR for 2007 if we do not have any us source income in 2007. It is appreciated if anyone can confirm these points. Thank you very much.

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Reply to
ysmrysmr
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Any gain or loss on real property in the US, is treated as gain or loss effectively connected to a trade or business in the US. As such you are eligible to avail yourselves of the tax benefit that allows exclusion of gain on the sale of your main home. That said, the problem you are probably going to run into, is that you are nonresident aliens in 2007 and as such, there is mandatory tax withholding by the buyer on any real property purchased from a nonresident alien. You would have to file a 2007 Form 1040NR with Schedule D in order to request a refund of any withheld tax.

Reply to
A.G. Kalman

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