topic Do I have to pay Michigan tax on property sold overseas? in Deductions & credits

Do I have to pay Michigan tax on property sold overseas?

ornate — Thu, 06 Jun 2019 15:14:07 GMT

Hello!

I am Michigan resident. I sold a home in another country. Do I have to pay any Michigan taxes on it? Capital gains are above $100 000 and there is no federal tax liability because of foreign tax credit.

If yes, do I have to pay MI estimated tax? This is my first year in USA as permanent resident.

No, you do not have to pay Michigan estimated taxes. Per...

LauraVF — Thu, 06 Jun 2019 15:14:07 GMT

No, you do not have to pay Michigan estimated taxes.

Per state rules, any portion of the foreign income included in adjusted gross income is subject to Michigan tax. However, Michigan allows residents to exclude foreign earned income that qualifies under federal IRC section 911. Please see this 2002 revenue administrative bulletin for more detail.

http://www.michigan.gov/taxes/0,4676,7-238-75545_43715-248934--,00.html

http://www.michigan.gov/documents/RAB2002-05_96120_7.pdf

Is sale of real property located outside of Michigan taxa...

ornate — Thu, 06 Jun 2019 15:14:09 GMT

Is sale of real property located outside of Michigan taxable in Michigan? Instructions for form MI-8949 say no.
I don't have any excluded foreign income (not elegible), I only have foreign tax credit.

PDF you have provided a link to: "Under the Michigan Income Tax Act (ITA), an individual domiciled in this state is subject to a tax upon all taxable income from any source whatsoever, except that attributable to another state"

I think my capital gains from sale of overseas real estate is attributable to another state. Per ITA 206.20 "state" means foreign country too.

Correct, the property located outside of Michigan will no...

LauraVF — Thu, 06 Jun 2019 15:14:10 GMT

Correct, the property located outside of Michigan will not be taxable in Michigan.