RetireJapan

Greetings,

I have read mostly all of the questions on here about capital gains tax from selling a property overseas to fund the purchase of a home here in Japan. As I am a newbie (in the newest sense of the word), I still cannot get my head around some of the terminology and such.

Basic questions:

1. We own a home in the states, completely paid for, done.
2. We sell it. Get money. Put it in bank account in America.
3. We bring said money into Japan. Obviously it'll be an eyebrow raiser for the Japanese bank we siphon it into...I think?
4. We use that money for property purchase here.
5. Live happily because of the above mentioned smooth process...hopefully.

What would I need to know before, during and after I do this? Taxes? Paperwork? What to prepare in Japan to be ready? I really think we would sell it at a huge loss, and that's where my wondering is about capital gains tax or whatever else.

Thanks for any insight!

solo7100 wrote: ↑Fri Apr 07, 2023 3:43 am Greetings,

I have read mostly all of the questions on here about capital gains tax from selling a property overseas to fund the purchase of a home here in Japan. As I am a newbie (in the newest sense of the word), I still cannot get my head around some of the terminology and such.

Basic questions:

1. We own a home in the states, completely paid for, done.
2. We sell it. Get money. Put it in bank account in America.
3. We bring said money into Japan. Obviously it'll be an eyebrow raiser for the Japanese bank we siphon it into...I think?
4. We use that money for property purchase here.
5. Live happily because of the above mentioned smooth process...hopefully.

What would I need to know before, during and after I do this? Taxes? Paperwork? What to prepare in Japan to be ready? I really think we would sell it at a huge loss, and that's where my wondering is about capital gains tax or whatever else.

Thanks for any insight!

think we would sell it at a huge loss, and that's where my wondering is about capital gains tax or whatever else.

What? Why? Capital gains is tax on profit.

Why would you choose to take a loss? I don't follow....

solo7100 wrote: ↑Fri Apr 07, 2023 3:43 am Greetings,

I have read mostly all of the questions on here about capital gains tax from selling a property overseas to fund the purchase of a home here in Japan. As I am a newbie (in the newest sense of the word), I still cannot get my head around some of the terminology and such.

Basic questions:

1. We own a home in the states, completely paid for, done.
2. We sell it. Get money. Put it in bank account in America.
3. We bring said money into Japan. Obviously it'll be an eyebrow raiser for the Japanese bank we siphon it into...I think?
4. We use that money for property purchase here.
5. Live happily because of the above mentioned smooth process...hopefully.

What would I need to know before, during and after I do this? Taxes? Paperwork? What to prepare in Japan to be ready? I really think we would sell it at a huge loss, and that's where my wondering is about capital gains tax or whatever else.

Thanks for any insight!

This will depend on your tax status here in Japan. If you sell the house before moving to Japan, no problem. You just move the cash (not a taxable event) and do what you want with it.

If you are resident in Japan already and sell the house, what happens? It might depend on how long you have been here (are you permanently resident for tax purposes -normally after five years).

If you are making a loss on the house, no problem. There would be no tax anyway. Are you making a loss?

If there is no capital gain there will be no capital gains tax to pay on the house sale. Simply send the cash over, the bank will ask you what it’s for, tell them it’s for property purchase. They will tell the tax office who may or may not contact you. Best to have proof of how much you bought and sold it for.

How long have you been in Japan and do you have any overseas source income? You may be on the hook for taxation on the amount of said income in the year you send the cash over.

I assume from your post that the US house is owned jointly 50/50? If so, and you buy 50/50 here that would avoid any gift tax issues.

Questions:

1. How long have you been living in Japan in the last 10 years?
2. Have you claimed any Depreciation on the Property in Japan over the years?
3. Does it still count as a Loss if you calculate Sale Price in Yen - (Purchase Price in Yen - Depreciation in Yen) - Other Costs in Yen ?
4. You get to take a Capital Gains Deduction of Y500,000, or Y30M if the property is your primary residence when you sell it (not in this case)
5. Is the Gain negaitive after the Capital Gains Deduction?

If the answer to 5. is yes, then no capital gains tax. Just send the money.
If the answer to 5. is No, but but the answer to 1. is less than 5 years, sell the property this year, but don't send the money to Japan until next year, then no capital gains tax in the year the money is remitted to Japan.

You should speak to an accountant just to make sure you are not exposing yourself to other tax liabilities at the same time, as mentioned by Beaglehound... These will depend on your actual total circumstances.

TokyoBoglehead wrote: ↑Fri Apr 07, 2023 4:14 am

solo7100 wrote: ↑Fri Apr 07, 2023 3:43 am Greetings,

I have read mostly all of the questions on here about capital gains tax from selling a property overseas to fund the purchase of a home here in Japan. As I am a newbie (in the newest sense of the word), I still cannot get my head around some of the terminology and such.

Basic questions:

1. We own a home in the states, completely paid for, done.
2. We sell it. Get money. Put it in bank account in America.
3. We bring said money into Japan. Obviously it'll be an eyebrow raiser for the Japanese bank we siphon it into...I think?
4. We use that money for property purchase here.
5. Live happily because of the above mentioned smooth process...hopefully.

What would I need to know before, during and after I do this? Taxes? Paperwork? What to prepare in Japan to be ready? I really think we would sell it at a huge loss, and that's where my wondering is about capital gains tax or whatever else.

Thanks for any insight!

think we would sell it at a huge loss, and that's where my wondering is about capital gains tax or whatever else.

What? Why? Capital gains is tax on profit.

Why would you choose to take a loss? I don't follow....

Hmm, I think I didn't use that phrase correctly (take a loss). What I was thinking is that the real estate value of the houses around us are much higher than our house (old, in need of many repairs, etc). So perhaps I mean "we won't get as much as other houses in the area" instead of loss. We bought it about 30+ years ago, so obviously the selling price in today's dollars would be more than 30+ years ago. But still, the houses around us are selling for $500,000+. Ours might get $300,000+ if we are lucky (I think).

Newbie, so much appreciation on this discussion!

RetireJapan wrote: ↑Fri Apr 07, 2023 4:23 am

solo7100 wrote: ↑Fri Apr 07, 2023 3:43 am Greetings,

I have read mostly all of the questions on here about capital gains tax from selling a property overseas to fund the purchase of a home here in Japan. As I am a newbie (in the newest sense of the word), I still cannot get my head around some of the terminology and such.

Basic questions:

1. We own a home in the states, completely paid for, done.
2. We sell it. Get money. Put it in bank account in America.
3. We bring said money into Japan. Obviously it'll be an eyebrow raiser for the Japanese bank we siphon it into...I think?
4. We use that money for property purchase here.
5. Live happily because of the above mentioned smooth process...hopefully.

What would I need to know before, during and after I do this? Taxes? Paperwork? What to prepare in Japan to be ready? I really think we would sell it at a huge loss, and that's where my wondering is about capital gains tax or whatever else.

Thanks for any insight!

This will depend on your tax status here in Japan. If you sell the house before moving to Japan, no problem. You just move the cash (not a taxable event) and do what you want with it.

If you are resident in Japan already and sell the house, what happens? It might depend on how long you have been here (are you permanently resident for tax purposes -normally after five years).

If you are making a loss on the house, no problem. There would be no tax anyway. Are you making a loss?

I have lived here for about 7 years. So a tax resident.
I don't know how to calculate if we are making a loss, but I feel it would be (?) because the house is in dire need of repairs and other major items that other houses in the area don't. Perhaps I didn't use that phrase (making a loss) correctly. Maybe we make a profit? But I have no idea how that would be determined.

Beaglehound wrote: ↑Fri Apr 07, 2023 4:26 am If there is no capital gain there will be no capital gains tax to pay on the house sale. Simply send the cash over, the bank will ask you what it’s for, tell them it’s for property purchase. They will tell the tax office who may or may not contact you. Best to have proof of how much you bought and sold it for.

How long have you been in Japan and do you have any overseas source income? You may be on the hook for taxation on the amount of said income in the year you send the cash over.

I assume from your post that the US house is owned jointly 50/50? If so, and you buy 50/50 here that would avoid any gift tax issues.

This makes sense. A few things however:

1. Been in Japan 7 years this summer.
2. No overseas income
3. House in the states belongs to mom. So, 0/100.

I assume that if she sells the home and sends me the money, then....gift tax issues?

Tkydon wrote: ↑Fri Apr 07, 2023 4:58 am Questions:

1. How long have you been living in Japan in the last 10 years?
2. Have you claimed any Depreciation on the Property in Japan over the years?
3. Does it still count as a Loss if you calculate Sale Price - (Purchase Price - Depreciation) - Costs ?

If the answer to 3. is yes, then no capital gains tax. Just send the money.
If the answer to 3. is No, but but the answer to 1. is less than 5 years, sell the property this year, but don't send the money to Japan until next year, then no capital gains tax in the year the money is remitted to Japan.

You should speak to an accountant just to make sure you are not exposing yourself to other tax liabilities at the same time, as mentioned by Beaglehound... These will depend on your actual total circumstances.

1. 7 years this summer.

2. I don't own the house, mom does. So I guess there was no need to claim depreciation since it is not connected to me....I think?

3. Wow, your #3 helps me understand how to calculate loss or gain. Will have to figure that out if the choice is to sell. Thank you.

Agreed about talking to an accountant. If and when we get there I will engage the services of one.

Thanks so much.

solo7100 wrote: ↑Fri Apr 07, 2023 5:21 am
1. 7 years this summer.

2. I don't own the house, mom does. So I guess there was no need to claim depreciation since it is not connected to me....I think?

3. Wow, your #3 helps me understand how to calculate loss or gain. Will have to figure that out if the choice is to sell. Thank you.

Agreed about talking to an accountant. If and when we get there I will engage the services of one.

Thanks so much.

OK, so it's not your house... In that case, the Capital Gain question is not relevant.

If your mother sells the house and sends you the money, then Gift Tax.

If you inherit, then Inheritance Tax.