Capital Gains if you move overseas?

Sep 3, 2021 11 Comments

How would you calculate capital gains if you move from a state with cap gains tax in the us, but are planning to move abroad to a country with their own cap gains tax laws?

Ex. Buy 1000 Tesla shares at $10 in New York/California in 2014 -> Sell 1000 shares some time after moving to Japan in 2023

I know expats get taxed federal rates but do you have to pay additional cap gains tax on the country you move to? Intention isn’t to evade taxes, I’d be moving for personal reasons/family.

(Assume long term cap gains tax + US citizen)

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  • Google
    vlad_g

    Go to company page Google

    vlad_g
    At least in CA (unsure but I imagine may be similar in NY), FTB will most likely say you owe them because you had an intention to eventually return to CA. Even if it is years, an expat is looked at as a transitory resettlement and that eventually you would return. Therefore they would argue you owe CA tax even if you gave up your CA ties

    The recommendation is to do it in two steps: first fully and properly relocate to a different state, establish ties there etc, and only then move overseas
    Sep 4, 2021 2
    • Google
      vlad_g

      Go to company page Google

      vlad_g
      Oh and the kicker in CA is that unlike the fed, they do not offer a foreign tax credit. So while the fed typically only charges of us tax was higher than what you already paid (it's more complicated than this), CA will simply add on top

      Consult a tax attorney who has dealt with this for the authoritative answer and suggestion for what to do
      Sep 4, 2021
    • FTB tax also applies if you own an LLC
      Sep 4, 2021

  • This comment was deleted by original commenter.

  • New
    sunny10

    New

    sunny10
    Beware of exit tax
    Sep 3, 2021 2
  • OP
    Thx for the info
    Sep 4, 2021 0
  • Ask a CPA, one thing to be aware of are the tax treaties between countries that you can leverage, for the avoidance of double taxation.
    Sep 3, 2021 0