Non-Resident Aliens and the Home Sale Exclusion
Learn whether non-resident aliens who sell residences in the United States qualify for the home sale exclusion of gain.
Does a non-resident alien living in the United States qualify for the IRC Section 121 home sale exclusion? Interesting question and not one that will be encountered often. And it seems the answer is yes if the nonresident alien otherwise meets the ownership and occupancy requirements and hasn’t relinquished U.S. citizenship or long-term resident status and is subject to the mark-to-market rules for covered expatriates. (IRC Sec 121 (e))
Reg §1.1445-3(b)(5) - Special rule for exclusions from income under section 121
A withholding certificate may be sought based on a section 121 exclusion as a reduction in the amount of tax due under paragraph (c)(2)(v) of this section. The application must include information establishing that the transferor, who is a nonresident alien individual at the time of the sale (and is therefore subject to sections 897 and 1445) is entitled to claim the benefits of section 121. For example, a claim for reduced withholding because of section 121 must include information that the transferor occupied the U.S. real property interest as his or her personal residence for the required period of time.