US Tax Return - Sale of property continuation. Following on from my question about foreign mortgage interest, here is an example of what I asked about: http://www.greenbacktaxservices.com/blog/expat-taxes-buying-selling-real-estate-abroad/
Please see the section: US Expat Taxes and Selling Real Estate Abroad
This shows there is a liability on the mortgage based on the difference of the 2 exchange rates?
Please can you advise.
When you say you disagree, are you saying that such legislation does not exist?
Does the US Tax system / IRS/ Federal law have this legislation?
Ok thank you. If not for mortgages, what does the legislation apply to?
I have found another site which has a source:
Please see: Taxation of Exchange Rate Gain
(Revenue Ruling 90-79, 1990-2 CB 187)
I'm not sure what the above means but there are many websites citing the same. I do not want to pay extra tax, however I am really worried that this mortgage interest is an issue. Please kindly see below which provides reference to the Revenue Code:
'With apologies for citing the technical references, section 988 of the Internal Revenue Code deals with foreign currency transactions and includes becoming a borrower under a foreign mortgage e.g. a GBP mortgage to buy a home in the UK. Under the US law predating Section 988, the borrowing and repayment of a mortgage loan is a separate transaction from the purchase and sale of the property. The repayment of the mortgage constitutes a closed and therefore, taxable transaction and as such there are usually tax consequences for a US person who redeems their UK mortgage or indeed any other non-US dollar loan.'