Esther Jenke also told the Times that finances played a role in her decision to renounce her citizenship.
“My husband and I bought a house. If we sell the house, even though it is our primary residence, because from a US perspective it’s foreign property, we would have to pay capital gains tax on it,” Jenke told the Times.
The 1st part says that there is a financial reason to renounce your citizenship, but the 2nd part makes it seem like they’ll pay capital gains on the house, specifically because they renounced their citizenship
If they remain US citizens, they will have to pay US capital gains tax on the sale of their home in the place they now live. They’d also be liable for US federal income tax. This would be on top of whatever taxes they’re liable for in the country they moved to.
If they have renounced their citizenship and are no longer resident in the US, then they’re (broadly) no longer liable for US taxes, including US capital gains on the sale of their home.
Renouncing citizenship is expensive, but massively cheaper than the taxes they’d pay as non-resident US citizens. I’d assume their income had come in under the threshold or something, so the matter only came up when they wanted to sell their home.
The US is one of the few countries who don’t care where you earn the money…
The financial incentive is to avoid paying taxes. Then she gave a hypothetical of what would happen if she hadn’t renounced us citizenship. Because the US taxes a foreign home sale as capital gains, even when it’s labeled as primary residence.
Because wealthy people hate paying taxes and would renounce citizenship to avoid, the US put in this percentage based fee to renounce US citizenship. For normal people it’s nothing. But for the wealthy it can be a lot of money. So now a bunch of them are suing to get it back.
It’s hard for these people to explain why they shouldn’t have to keep paying taxes, so it’s always going to sound confusing when they want sympathy.
I can’t quite follow this:
The 1st part says that there is a financial reason to renounce your citizenship, but the 2nd part makes it seem like they’ll pay capital gains on the house, specifically because they renounced their citizenship
If they remain US citizens, they will have to pay US capital gains tax on the sale of their home in the place they now live. They’d also be liable for US federal income tax. This would be on top of whatever taxes they’re liable for in the country they moved to.
If they have renounced their citizenship and are no longer resident in the US, then they’re (broadly) no longer liable for US taxes, including US capital gains on the sale of their home.
Renouncing citizenship is expensive, but massively cheaper than the taxes they’d pay as non-resident US citizens. I’d assume their income had come in under the threshold or something, so the matter only came up when they wanted to sell their home.
And somewhere, the world’s smallest gold plated violin shittily plays an off-tune medly of mediocrity.
The US is one of the few countries who don’t care where you earn the money…
The financial incentive is to avoid paying taxes. Then she gave a hypothetical of what would happen if she hadn’t renounced us citizenship. Because the US taxes a foreign home sale as capital gains, even when it’s labeled as primary residence.
Because wealthy people hate paying taxes and would renounce citizenship to avoid, the US put in this percentage based fee to renounce US citizenship. For normal people it’s nothing. But for the wealthy it can be a lot of money. So now a bunch of them are suing to get it back.
It’s hard for these people to explain why they shouldn’t have to keep paying taxes, so it’s always going to sound confusing when they want sympathy.