I am moving back to my country due to visa issue. I sold my house but I am still on my company's payroll. Do I need to pay tax on property gain? How can I save the tax?

[Bsch4477]

How long did you live in your house and are you filing married?

[syed-sadiq85-gma]

Moved April 7,2021. Moved out April 30th, 2022. But still staying in an apartment to figure out my visa options. Now its confirmed that i must have to go back. I am filing jointly with my spouse. She is a house wife though. No income from her side.

[Bsch4477]

The capital gains exclusion is $500,000 but since you didn’t live in your home for 2 years you would be eligible for half that amount since you would qualify for a partial exclusion. 

[syed-sadiq85-gma]

Thanks much!! and just to understand it better, the "gains" means the benefit (sale price - buying price) or gains means whatever price I sold the house for?

Also, I had to sell it because of the visa status as I couldn't stay in United States. and I don't see any clause of that anywhere?

[Bsch4477]

The gain is what your net proceeds when you sell minus what you paid and minus any capital improvements. I’m not surprised that a change in visa status is not specified in the list of reasons for partial exemption since relatively few  would have that problem. But you are forced to move and that is in keeping with the intent of the law. 

[Opus 17]

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@syed-sadiq85-gma wrote:

Thanks much!! and just to understand it better, the "gains" means the benefit (sale price - buying price) or gains means whatever price I sold the house for?

Also, I had to sell it because of the visa status as I couldn't stay in United States. and I don't see any clause of that anywhere?

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You capital gain is the difference between the sales proceeds and the cost basis.  Your cost basis is what you paid for the house, plus any permanent improvements you made.  You can also include certain closing costs and selling expenses.  Gain has nothing to do with cash out.  If you bought the home for $100,000 and sold it for $150,000, you have a $50,000 gain.  If we imagine you had taken a cash out refinance for $130,000 and only got $20,000 of cash at the sale, your gain is still $50,000.  You just got some of it early.

You still pay US tax on all your world-wide income if you are a US resident for at least 183 days of the year.  If you have to pay foreign tax on the same income, you may get a tax deduction on your US tax return.

See IRS publication 523, https://www.irs.gov/pub/irs-pdf/p523.pdf

If you file a joint return with a spouse you can exclude the first $500,000 of gain if you lived in the home as your main home for at least 2 years and owned it at least 2 years.  If you must sell in less than 2 years for certain unexpected hardships, you can claim a partial exclusion.  In this case, leaving the country due to a visa problem would certainly be an unexpected hardship.  The partial exclusion is based on whichever period is shorter--how long you owned the home, or how long you lived in it as your main home.  In this case, that would be the time you lived in the home as your main home, 388 days, so the exclusion you are eligible for is 388/730=53.1% x $500,000 = $265,753.  If your gain is more than that, it is a taxable long term capital gain, taxed at a lower rate than your income from working, usually 15% for most people and 20% for some higher income taxpayers.  

You don't need to attach proof of your unexpected hardship, but keep records for at least 3 years in case of audit.