Sale of Residence in Mexico

[maggie2115]

I have owned a home in Mexico for over five years and have sold it.  It was never rented.  Can I use the $250,000 capital gains exemption when I file my taxes.   

[pk]

@maggie2115  for US tax purposes , while you meet the  ownership clause, you still will need to meet  the use clause (  730 days  total used as main residence within a look back window of five years from the date of sale consummation ) and  not taken this exclusion in the last two years.  If you are filing joint then,  at least one of you must meet the ownership clause but both must meet the use clause for the US$500,000 exclusion )

I am assuming that you are US person  ( citizen/ GreenCard / Resident for Tax purposes ).

Does this make sense ?   Is there more one of us can do for you ?

[rjs]

As pk outlined, you can use the exclusion for U.S. tax if you meet all the requirements. It doesn't matter what country the home is in. But even if you are able to exclude part or all of the gain from U.S. tax, you might still have to pay tax to Mexico on the gain. You have to check the Mexican tax laws. We can't help you with that here.

[pk]

@maggie2115 , very much agreeing with my colleague  @rjs    ( thank you ),  we have not addressed the Mexican Tax portion.  As far as I know  ( and I do have properties in MX ),  unless you also hold Mexican Nationality, there is always   Mexican  Capital Gains Tax in addition to  IVA.   

You should consult with a  Mexican Lawyer on this .

Note that if you are able to exclude  gains from US  taxes,  you may or may not qualify for foreign tax credit  ( depending on the exact facts and circumstance  (  nationality / location/ how-held  Fidiecomiso  etc. etc.)

[maggie2115]

Thank you for your valuable feedback and confirming that I will need to prove at least 730 days in Mexico over the last 5 years from the date of sale.  

With respect to the Mexican capital gains tax, we have already tackled that by becoming permanent residents of Mexico and meeting their criteria to avoid any tax liability. 

I have fished through Turbo Tax looking where I would enter the residency information to gain the exception but could not find it.  Can anyone direct me to where I would find the right form?

Gracious, again.  

[rjs]

When you enter the sale of your home in TurboTax, it asks you some questions to determine whether you qualify for the exclusion, including questions about residency. If you did not see those questions, you might be entering the sale in the wrong place. In the Search box type "sale of home" (without the quotes), then click the link that says "Jump to sale of home." Or go to the following:

• Federal Taxes
• Wages & Income
• Less Common Income
• Sale of Home

If you need more specific instructions, tell us whether you are using TurboTax Online or the CD/Download TurboTax software, and which edition (Basic, Deluxe, etc.).

The information about residency does not go on your tax return. TurboTax just uses it to determine whether you qualify for the exclusion. You don't need to show proof unless the IRS questions your tax return.