Tax Implication on American Citizen Buying Flat in HK

I am an American citizen living in HK who jointly bought an apartment in HK last year with my boyfriend (who is British) with 50% ownership each. Assuming we make a profit when we sell the apartment, what are the tax implications for me? Do I owe 50% of the capital gains tax?

Dear CarolynHK:


We are a tax consulting firm specialized in U.S. taxation of foreign income and international transactions.


In your situation, 50% of the capital gain from the sale of the property is subject to U.S. tax. However, if you meet the two tests below when you sell the property, you will qualify to exclude capital gain up to US$250,000.


a) Did you own your residence for at least 2 years (the ownership test)?

b) Did you use your residence as your principal residence for at least 2 years during the 5-year period ended on the date of sale (the use test)?


If you do not meet the ownership and use tests due to a change in health or place of employment, you may be able to claim a reduced exclusion.


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Brian Wong, US CPA

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Southwest Tax & Financial Planning Limited

8/F., New York House

60 Connaught Road Central

Hong Kong


Tel: (852) 2575 5800

Fax: (852) 2523 6800

Email: swtfp@netvigator.com

Website: www.yp.com.hk/swtfp