International Property
Hi all i am posting this actually for a friend of mine.. He is unsure of wha to do .. So i suggested he ask the people who DO.. and since i already have an account here i decided to post for him. Anyway..
He bought a flat in Prague oh about 4 years ago.. and has been renting it.Apprently in Prague a foreginer cannot own property.. but they can own a company wich can own property.. Pretty typical i beleive for foreign investments..
He purchased the place with a HELOC on his home here.
Here is the kicker.. Vlaue on the flat has risen approx 18% since.. and set to got up another 22% this year.. he will start paying PITI on the loan next year so he is looking to get out possibly.. BUT the profit from the sale will be taxed at the Czeck rate ot 25%.. and he has no way to carry that back to here.
My guess was for him to open a Corp here.. and have it own (buy all the shares of the Czek Corp for a buck or what have you) then when try and take the Czeck taxes as a loss here to try and recoup some of them..
like i said though i have never done any international investing.. and dont know So i was hoping someone here actaully DOES DO IT.. and DOES know..
thanks a million for any help in advance look forward to hearing your suggestions..
I am not sure that you have a specific question. I am guessing that you are asking how the capital gains taxes on the sale of his foreign property will work.
The profit on the sale of the foreign property will also be taxed on his US tax return. Taxes withheld or paid to the foreign nation can be claimed on his US tax return either as an itemized deduction (Schedule A) or as a Foreign Tax Credit (Form 1116).
In my opinion, there is no need to form a corporation just to recover foreign taxes paid. Have your friend consult a tax professional for specific details.
I am not sure that you have a specific question. I am guessing that you are asking how the capital gains taxes on the sale of his foreign property will work.
The profit on the sale of the foreign property will also be taxed on his US tax return. Taxes withheld or paid to the foreign nation can be claimed on his US tax return either as an itemized deduction (Schedule A) or as a Foreign Tax Credit (Form 1116).
In my opinion, there is no need to form a corporation just to recover foreign taxes paid. Have your friend consult a tax professional for specific details.