Offer in Compromise - how is overseas home in wife's name handled?

[bhuether]

Hi,

Trying to figure out how IRS, regarding an offer in compromise (OIC) makes determinations on reasonable collection value for foreign homes.

My wife and I live overseas in an apartment we bought last year.  Home equity lines of credit are not offered here. We made 50% down payment, with 15 year mortgage. The tax debt arose from me making early IRA withdrawal, and we weren't married when I was contributing to the IRA. Those are the just the circumstances.

Now, does the IRS treat this in usual manner, estimating quick sale value, even for a foreign home not in my name? If I file taxes not jointly, does that make a difference?  That is, if I file separately, and the debt is just on my return, does IRS still force me to sell a home, if it is only in spouse's name?

There is no viable long term rental market where we live, as most people own their homes.  So per square meter, renting is prohibitively expensive compared to buying, and availability of suitable apartment is pretty much non existent.  So if we sold to pay my 2021 tax debt, we would be back in position of needing to buy, but without the necessary money for a down payment.  As it is we live in fairly small place, where I have home office needed to generate expected future income.

Anyway, curious if anyone has thoughts/insight into angles on this, so that the home equity would not be considered realizable as part of the OIC determination.

thanks

[ColeenD3]

Can you please clarify exactly what your question is? I am assuming you are a US citizen or resident.

Are you asking if you sell at a gain is it taxable to you? The answer is yes. The fact that it is a foreign home is irrelevant. You can choose to file separately if you personally don't wish to have the tax burden, but your wife's standard deduction will be cut in half and she will pay a higher amount on the gain.

[bhuether]

Hi, I edited the question a bit.  This is all about home equity as viewed by IRS in Offer in Compromise process. I am US citizen, wife is foreign, with ITIN, but not working at moment. I am trying to do OIC paperwork, but looks like I will get flat out denied if the IRS has an angle on the foreign apartment in wife's name, since the equity is more than the debt. So trying to find some rationale as to placing the apartment in a viewpoint from which its equity is not considered realizable by the IRS.

[DianeW777]

The IRS will take into account all assets and liabilities when considering an offer in compromise (OIC).  You may want to consult with a company or attorney who specializes in this action. We are unable to offer legal advice for you.

• IRS Offer In Compromise