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Selling in house in China – Do I have to pay tax on capital gains?

(from our FAQ for expat tax filers)
Question: We recently sold our home in China at a considerable profit. Will we have capital gains tax obligations on the U.S. side?
Answer: In addition to potential capital gain exclusions on sale of primary residences, the U.S.-PRC Tax Treaty stipulates that capital gains derived from the sale of real estate (i.e. real property) may only be subject to capital gains tax in the contracting state (in this case, China). However, tax treaty wording can be quite complicated and often requires a tax professional’s input to determine whether or not it is applicable under each set of individual circumstances.

Ask an Expert: I have not filed federal tax returns for several years. Will I have to pay any penalties when filing?

(from our FAQ for expat tax filers)
Question: I have not filed federal tax returns for several years. Will I have to pay any penalties when filing for multiple years?
Answer: Not necessarily. If you have not filed and do not have any taxable income (e.g. under the threshold of the Foreign Income Exclusion for all tax years), then neither penalties nor interest will be applied. If you do owe tax, then you may be eligible for the Streamlined Foreign Offshore Procedures, under which you would be able to avoid non filing and/or late filing penalties and only have to file for three years (but you would still owe interest on any unpaid tax). However, it is always best to file your returns on time every year. Many Americans are not aware that they are still required to file even though they may be well under the threshold allowed under the Foreign Income Exclusion – in fact, you have to file in order to be able to apply the exclusion.