I am a dual citizen of the US and Australia, going to college in the United States. My siblings (all older) and I recently lost our mother, and with it we have decided to sell her house. We are going to split the costs and profits of selling it. My brother and sister are in Australia, but while living and studying in the United States I don’t know how I will be able to help, since I already went to the memorial and don’t want to take a semester off to find a buyer. I have never, obviously, been involved in selling international property. Furthermore, I don’t know what my tax liability is. Is there any tax liability? What is your advice here?
Selling a home is hard, especially after the death of a parent or family member. You are lucky to have two siblings in Australia who can list the house, talk to buyers, walk them through the property, and finally, hopefully, close the deal. Reading between the lines, though, it seems like they also expect you to do a third of the work. That’s fine, except you are a busy student who also happens to be a half-world away. What can you do to help out? And when you do help out, when the deal is closed and everybody is walking away with their money pot, what might you, as a dual citizen, owe your half-Uncle Sam?
MPA Mag, an online publication for mortgage professionals, has published a long list of ideas for selling international property. On this list, topic #5, “Deepen your marketing even further,” is of particular interest. Posting about the sale on your social networks can help gin up interest; after all, you never know who might see it and pass along to a friend, but in 2018 that is probably the first step people take. If you can get your siblings to help, they can shoot a video of the home for YouTube, and you can offer to edit it and post it. Alternatively, you can put together a booklet of fun things to do in the area the home is located in, then email the booklet for them to print out and leave in the home. Check out this video, from Realtor.com, that details how to shoot and edit home tour videos.
When your marketing pays off, your siblings find the perfect buyer, the deal is closed, and you’ve got your money, then what? First, you must report the transaction to the US government. According to The Balance, the US taxes citizens on worldwide income, not just the income that they earn in the US. The house will be priced as capital gains. However, if it was your principal residence you may exclude the first $250,000 from taxation. If you end up earning more than that amount, or if it was not your primary residence, you will pay more. Taxes for Expats notes that “primary residence” is generally determined to be somewhere you have lived for two out of the previous five years.
The process of transferring the title of a house in called conveyancing in Australia, and it will cost a few hundred dollars. Check the internet for an estimate of conveyancing costs in Brisbane. Once you and your siblings have retained a conveyancing firm, you should let them know about your unique situation, so that they can advise you on your tax liability. You may also want to hire an accountant in the US to look over your income. Though they will be even pricier, their advice will save you thousands, and the possibility of years of tax strife.
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