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Question for the Money Doctors

Question submitted on Jan 31, 2013.

Question

The questions concern a person who owns property in the US (state of Washington) but is not a US citizen, does not have a green card and does not pass the substantial presence test.

For the purposes of discussion this will be the only income from US sources the person will receive and they will file their US income taxes for the year.

a) if the property generated rental income is any of that income taxable in the US? I assume expenses to maintain the property are deducted from income and the difference would be the amount in question.

b) if the property was sold will any witholding tax removed from the proceeds be retained by the government or will they be entitled to a full refund?

Answer

a. Taxes would have to be paid.

b. Usually the closing attorney will withhold taxes then depending on what the tax liability is when the return is filed will determine that amount of refund or tax liabilty due to the government.


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