 No
home-sale exclusion for foreign students
Tax Talk by George
Saenz • Bankrate.com
 Dear
Tax Talk,
My wife and I were students on F1 visas from
1994 to December 2000, when we left the United States. We bought
a house in 1994 and lived in it for almost six years. Since 2000,
it has been used as a vacation home. We now would like to sell it
and buy a smaller home. Since we lived in it for two of the past
five years, would this make it our main home and thus not taxable
on the profits? If not, how much taxes would we have to pay on a
$150,000 profit from the sale? We would appreciate your advice.
Thanking you. -- Shervin
 Dear
Shervin,
A lot of areas in tax are black and white, but there are also some
gray areas. An individual who sells a principal home in which he
has lived and owned for two of the last five years qualifies to
exclude from income up to $250,000 in gain from its sale. The exclusion
is $500,000 in gain for a married couple, provided they can and
do file a joint return.
An individual who is on an F1 or student visa is not
considered a resident, and therefore does not have a principal residence
in the United States. This means you wouldn't get the exclusion.
An individual who has been on a student visa for more
than five calendar years can be considered a resident of the United
States for income tax purposes. For example, in your case you were
considered nonresident for 1994 to 1998 because you were on a student
visa.
In 1999 and 2000, you were considered a resident,
as you may not be considered nonresident for more than five calendar
years on a student visa. Since dates and certain filings are important
here, you really should consult a tax
professional.
If you can't qualify to exclude the gain, you
may be able to do a like-kind
exchange. If you can't do a like-kind exchange, your tax will
be at long-term capital gains rates of 15 percent. Since you're
a nonresident, the buyer may have to withhold 10 percent of the
sales price on closing. Any tax withheld can be reduced or waived
if you file an application
for reduced withholding prior to the sale.
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