Would US real estate acquired by an individual for use as a residence, worth in aggregate over USD$300k (say $320k) and sold by NRA spousal equal co-owners (say $160k each) meet the 8288 filing exception for when one (or more) individual(s) acquire U.S. real property for use as a residence and the amount realized (in most cases the sales price) is not more than USD $300,000?
The amount realized by each spouse is under the threshold but the aggregate is over. Specifically with 1040NR married filers who must file separate 1040NR returns, for purposes of this filing exception, does one look at the amount realized per taxpayer (even if spouses co-owing the same property) OR at the amount realized on the property itself?
Kindly cite a law and its link in your reply. We can reason, guess and suppose all we want but that won't answer the question in absolute tax law terms, which is what I'm looking for here. Tks!
8828 US real estate sold by spousal co-owners
Moderator: Mark T Serbinski CA CPA
BTW, the law source for this exception is:§ 1.1445-2(d) Exceptions to requirement of withholding and it's mostly preoccupied with defining acquirer "residence".
(1) Purchase of residence for $300,000 or less. No withholding is required under section 1445(a) if one or more individual transferees acquire a U.S. real property interest for use as a residence and the amount realized on the transaction is $300,000 or less.
I am inclined toward looking at the aggregate purchase price and not the amount realized per taxpayer and say that the Reg, when stating "the amount realized on the transaction" means just that. However, one could argue that "the amount realized on the transaction" means by the taxpayer. So, that language alone isn't conclusive, at least to me.
(1) Purchase of residence for $300,000 or less. No withholding is required under section 1445(a) if one or more individual transferees acquire a U.S. real property interest for use as a residence and the amount realized on the transaction is $300,000 or less.
I am inclined toward looking at the aggregate purchase price and not the amount realized per taxpayer and say that the Reg, when stating "the amount realized on the transaction" means just that. However, one could argue that "the amount realized on the transaction" means by the taxpayer. So, that language alone isn't conclusive, at least to me.
Interesting, the Code (Section 1445 (5)(B) is actually clearer than the regulation, b/c the code says “realized for the propertyâ€, while Reg § 1.1445-2(d)(1) says “realized on the transactionâ€.
While from the Reg alone, I was inclined toward looking at the aggregate purchase price and not the amount realized per taxpayer and say that the Reg, when stating "the amount realized on the transaction" means just that. However, with the Reg using “Transaction“ one could argue that "the amount realized on the transaction" means on the transaction per each taxpayer. So, that Reg language alone isn't conclusive, at least to me.
In contrast, that argument can’t be made to say that “realized for the property†means per each taxpayer.
While from the Reg alone, I was inclined toward looking at the aggregate purchase price and not the amount realized per taxpayer and say that the Reg, when stating "the amount realized on the transaction" means just that. However, with the Reg using “Transaction“ one could argue that "the amount realized on the transaction" means on the transaction per each taxpayer. So, that Reg language alone isn't conclusive, at least to me.
In contrast, that argument can’t be made to say that “realized for the property†means per each taxpayer.