I am selling my 2 apartments in foreign country and I am wondering what the US tax implications are.
Firstly, me and my spouse have been US resident (and CA state) starting in year 2020. For the tax filing in 2021 and 2022 we have filed married jointly.
The following numbers are for illustration purposes only, but I wonder if my reasoning is correct.
Apartment 1:
bought in 2012, USD eqv cost (including expenses) = $1,430,000. Sold in April 2022, USD eqv sales price (adjusted for expense) = $1,800,000. This is a primary home where we have lived 2 out of the last 5 years.
Also put up for rental September 2019 onwards. So far in my US Federal tax return (2021 and 2022), we have used depreciation of $48000 in the two year.
So per my calculation – Adjusted Basis cost = $1,320,000 ($1430000 – total depreciation claimed of 48K+48K+12K (Jan2022-Mar2022)).
Gain = $480,000
Taxable gain = 0, since we qualify for $500K capital gain exemption having lived 2 years out of last 5.
Question 1:
Is the above working correct including that I only factor in the depreciation amount that I have used in my US tax returns.
Question 2:
Does the mortgage have to be taken into account? Of the sales, $900k went towards mortgage loan settlement.
Apartment 2:
Bought in 2008, USD eqv cost (including expenses) = $270K. Sale to be completed in June 2022, USD eqv sales price (adjusted for expense) = $251K.
This apartment was available for rent September 2010 onwards. So far in my US Federal tax return (2021 and 2022), we have used depreciation of $7K each year.
So per my calculation – Adjusted Basis cost = $250K ($260K – total depreciation claimed of 7K+7K+4K (Jan2022-Jun2022)).
Taxable Gain = $1K
Question 3:
Is the above working correct and what will be the tax % applicable for the gain?
