CAPITAL GAINS TAX
FROM SALE OF PRINCIPAL RESIDENCE
Under the terms of the current capital gains tax provisions, where the expatriate decides to sell their principal residence, they may not incur any capital gain tax up to $500,000 of gain for married person filing jointly and $250,000 for single or married person filing separately. To qualify for this provision, the expatriate must have owned and lived in the principal residence for two out of the last five years from the date of sale. Even if the expatriate does not meet this condition, it is still possible for qualify for a pro rated exclusion amount. For example, if assignee owned and lived in the house only for twelve months, they would still get 50% of the gain exclusion (twelve months out of twenty four months). That is, $250,000 of gain (married person filing jointly) and $125,000 (single or married person filing separately). Accordingly, it is expected that no capital gain tax would arise from the sale of the principal residence.