Hi,

Here's the situation:

I'm married to a local Chinese and we will be purchasing an apartment soon. I'm wondering if I should put both of our names on the estate?

My concern is if I put my name on the estate, do I have to go through legal documents and report to the USA that I have purchased this estate? Will I be taxed by the USA? Then 20 years later, if we decide to sell, will I be taxed again if I sell and profit from it?

i have no say in answering the second question.

As to whether you should put both names on the estate or not, you may need to consider the marrital property issue. Since the estate is in China, the nature of the marrital property shall be determined under Chinese laws. If you buy this proeperty after you get married, this property shall belong to the community property, coowned equally by you both, in the absence of a pre-nuptial agreement. However without your name on it, your wife will be able to sell the property on her own without your consent.

as to tax implication in China, you will surely be taxed here if you sell the property. You will need to pay business tax and income tax here, both depending on the period of holding of the property.

"In the event she is able to circumvent this requirement, you can easily get a Chinese family court judge to order her to pay you 1/2 if you file for divorce."

When the marriage is derailed and one spouse sells the property, you are not easy to get back your half at all. Esp given that a foreigner is going to sue a Chinese national, you are probably be dragged into despair in China court system.

overh20 wrote:
You must be a fake lawyer, right?

The family court system in China is pretty idiot-proof even by Chinese standards. The courts that hear divorces are pretty much corruption free and are much more efficient that when they hear other civil cases.

hehe, i am a fake one. YOU ARE a real good Chinese lawyer. Have you ever represented a client in Chinese courts?

If you are a foreigner, there is no sense to argue such a thing with you. If you are a Chinese, i have to say you are a naive and innocent person.

there is no need to start a flame war here with a guy as you. It is not a smart thing for you to claim that you have "seen" many cases and come to believe China has a good family (or otherwise) court system. You probably have seen only the superficial thing.

Just answer me one question. if you have a good answer or good solution to the problem, I will say you are right and smart. Otherwise, you may slam your mouth.

Assuming that one spouse sells the property (community property with only one spouse's name on it) before divorce and transfers the sale cash to her or his relatives or simply hides it somewhere, now as you say "you can easily get a Chinese family court judge to order her to pay you 1/2 if you file for divorce". Tell me how you can help your client to get back his or her half.

unless i see you come up with a good and creative answer, I will not give any new reply here.

“99.999% of the people will o what the courts have ordered because they know that even in a WOFE the Party can make sure they get fired. ” How come you get the percentage? Like i am reading a fairytale.

You are relying on the Party? You are saying people will easily pull out of their money becuase of being afraid of being fired? are you a primary school student?

I am not sure of whether you have fabricated the two cases. Probably, you are lucky enough to witness the true stories. YOu definitely don't understand the whole picture.

"Also, as long as the hukou book says you are married, you need your spouse's signature to negotiate a title even if only in one spouse's name."

Where the hell you come to know that when one sells a house under his own name, he is required to show his hukou book?

It is not cool to talk about a foreign law when you don't really understand it at all. It is an irresponsible manner and you may mislead people.

I don't think you are going to say "i have seen another two cases....."

ok, man, i am not going to launch personal attack on you, since I don't think it is the right way to have discussion even on the vitual forum. Your personal attack on me showed that you are not a well cultured/educated person, easily losing your temper and going wild. You barking at me only bring you shame.

Yes, "When you buy a house you have to show your hukou book. When you obtain a mortgage every bank will demand to see your hukou book". You intentionally miss the key point: do you need to show your hukou book when SELLING your house? Answer this question, my man.

Whether I have bought a house or not does not have much to do with our topic. However, if you insist on finding out whether I have a house, I would like to invite to see my Ownership Certificate in person. At that time, please don't flush and blush.

I sum up my key points in this dicussion: it is safer to put both spouse's names on the property title certificate. Otherwise, even though the house is community property, the spouse whose name appears on the title certificate can sell the property without the other's consent and then hide the sale proceeds. Then the other party may not easily get back his or her half.

Now i want to close the topic to avoid more barking from you. Before that, i need to tell you one thing: as a mature man, when you realize that you may make a mistake or error, the best way to go is to admit that mistake and learn more. Launching personal attack is just not a decent way to have a dicussion with others.

Bye Bye.

I will draw up the lines to answer your question:
China is not a community property state which means if your name is not on the property, then you dont need to report anything on your US tax return.
Let's say what happens if your name is on the property, here if you purchase with a mortgage, then you get mortgage deduction on the Sch A itemized deduction. If your wage in China is lower than $100K, you get foreign earned income exclusion, so you dont even need to worry you would have some tax due during the tax year.
Once you sell the estate taxes, your name is on, if you hold the property lower than 5 years, then you need to report the income after convert with spot exchange rates. But if you hold the property longer than 5 years, then you can exclude up to $250,000 in profit from the sale of your home (or $500,000 for a married couple).
I hope it helps.

Shirley

overh20 wrote:

USxpatax wrote:I will draw up the lines to answer your question:
China is not a community property state which means if your name is not on the property, then you dont need to report anything on your US tax return.
Let's say what happens if your name is on the property, here if you purchase with a mortgage, then you get mortgage deduction on the Sch A itemized deduction. If your wage in China is lower than $100K, you get foreign earned income exclusion, so you dont even need to worry you would have some tax due during the tax year.
Once you sell the estate taxes, your name is on, if you hold the property lower than 5 years, then you need to report the income after convert with spot exchange rates. But if you hold the property longer than 5 years, then you can exclude up to $250,000 in profit from the sale of your home (or $500,000 for a married couple).
I hope it helps.

Shirley

The IRS states otherwise.

China actually does follow community property rules, but that has nothing to do with IRS reporting in this case.

Actually, you cannot deduct interest on mortages paid outside of the US to non-US banks.

Even if your name is not on the property, if you are, in fact, a beneficial owner you are fully liable and failure to file can result in civil and criminal sanctions. An example of a beneficial owner is if you give the money to another to buy and hold in their name, but, in fact, the property is really yours. Think of it as using a straw purchaser. Of course, the lines are blurred when it relates to a US tax-exempt foreigner and a US citizen and there is probably litle to worry about.

I can only say my professional is US tax specialist (about 3 year experience), and i am right now working in the Netherlands for the company called Taxpat, and we own 80% of the market of all the US expats here in the Netherlands, i have everyday at least one tax return out of my hand. Perhaps i m not sure if china follows the rule community property, thats need to be confirmed with lowyer. But please don not doubt my expertise. Why i am here, because i plan to go back China to work as an independent US expat tax consultant, and i am chinese, studied in University of Miami.

Here are the answer if china follows the community property rule:
Even your name is not on the property you still own 50% of the property, so once you sell it you still need to report 50% of the income and follows the rule what i have mentioned above unless you sign the prenuptial agreement to own seperate property.
and you only deduct the part of mortgage interest whatever you pay, so if you pay 100%, then you can deduct 100% mortgage interest on sch A.