One of my relatives is trying to get some help regarding capital gains tax from selling an international property. We feel this is more complex than our usual tax guy can handle, and we want to consult someone who's more familiar. Again, this is just for a consultation so we understand what's going to happen etc. Should we look for a CPA or a tax lawyer? And how do we find a good one? Other then googling for one.
Posted Jul 20, 2016, 5:12 PM UTC
As a tax lawyer (planning, not IRS controversy), I'd say this is a job for a qualified CPA, unless the sale of the property brings further objectives like a need for estate planning, or you need a deed drafted for a like kind exchange, etc.
Finding a firm suitable for this depends on where you are. Big cities are bound to have the big guys KPMG, Deloitte, etc., who are great. Other than that, look for an established firm with 15 to 20 accountants or so. Referrals from business owners or friends and family are also helpful.
Also, good counsel isn't cheap. Expect to pay anywhere between 250 and 500 an hour for their time.
Now I feel cheap at $200.
Wow, if your regular guy can't handle this, step up and get someone that can. A good CPA or EA should be able to handle this situation. Best resource is probably recommendations from friends, coworkers and family.
Huh. I'm an attorney and I focus in taxation. I think you need a tax lawyer, not a CPA--and I think you need on here in the States as well as a lawyer based in the jurisdiction where the property is located. Here's why.
A CPA cannot answer the question of "who" is selling the property, "who" owns it; where and when did the sale actually take place (across country lines), etc. These are legal questions, not GAAP or IFRS questions.
Ex: one of my clients owns property overseas, in their 'home country.' The manner in which property is vested in that country is different (unsurprisingly) than the U.S. One of their adult children was vested on the foreign property--but not in a term that really translates to "tenants in common" or other U.S. term. We had them seek legal counsel licensed in that country to determine what legal rights the child had in that property.
The answers we received: the adult child could not force a sale of their interest, was not entitled to a proportionate percentage of the profits on sale, was not responsible for the upkeep or costs associated with the property, and had no legal rights to the land outside of whatever the parents gave permission for in any particular instance. The 'vesting' was something that would take affect upon death of the parents--and could be amended/revoked before the parents died (at least the male--unsure of the female's rights). In short, it was maybe closest to a 'revocable trust' that was registered with the foreign country through 'title.'
After receiving this determination, I explained to my client that it was unlikely that the child "owned" a portion of the property--and that the most likely safest position to take was that the parents were the full owners, and accept the entirety of the gain as taxable income to themselves, with subsequent gift tax consequences for any transfer to the child (which was an issue, given the sizes of the estate).
International transactions require multi-jurisdictional legal questions answered; I'm not sure how a CPA would use GAAP, IFRS, or Statements to engage in the legal research required to make these determinations. No domestic attorney can answer all the questions you need answered--you'll need separate counsel licensed in each jurisdiction that's relevant.
You want someone (probably CPA) who knows cross border stuff with that country where the property was. So if the property was in Canada you want someone who knows US and Canadian tax.
Every country is going to have its own rules, but be prepared to file a tax return for that foreign country. You should be able to claim a foreign tax credit for any tax paid to the foreign country.
As a CPA I also agree that this be something to consult a CPA about. The comment of looking for referrals in your area is key. I recommend meeting with a few (or having phone conversations) and seeing what their experience in situations like this is. Depending on whether you need assistance with the international tax side or just the US side this could be a little more straight forward than it sounds. It's when you have the complication of filing in other countries that things get more complicated. In similar instances I've usually worked with a professional in the other country; they handle the foreign filing and I handle the US filing.
depends on the potential magnitude of the transaction. about how much are the proceeds from the transaction?