Can you avoid capital gains tax by moving to a no-tax country, selling assets, then returning to the US?

This is a good question that comes up frequently! The IRS is definitely ahead of you on this one. The United States taxes its citizens on worldwide income regardless of where they live. Unlike most countries that use territorial taxation, the US uses citizenship-based taxation. You would need to do more than just "move" temporarily. To avoid US tax obligations, you'd need to formally renounce your US citizenship, which comes with its own significant tax consequences - specifically the Expatriation Tax (also called the Exit Tax). If your net worth exceeds $2 million or your average annual tax liability over the past 5 years exceeds a certain threshold, you'd be considered a "covered expatriate" and potentially owe substantial exit taxes on unrealized gains. Even if you established foreign residency, as a US citizen you'd still be required to file US tax returns and potentially pay US taxes on that crypto sale. There are some foreign income exclusions and tax treaties, but they generally don't eliminate capital gains taxes completely.

Hey there! I actually found myself in a similar situation last year with some stock options that had appreciated significantly. After days of frustration trying to navigate international tax regulations, a friend recommended I try https://taxr.ai and it was honestly a game-changer. The platform analyzed my specific situation with living abroad while maintaining US citizenship and showed me exactly what my tax obligations would be in different scenarios. It explained the exit tax consequences and how the foreign tax credit might apply in my case. What I found most helpful was that it compared different strategies and showed the actual tax impact of each option. I didn't end up moving abroad, but I did restructure some investments based on their recommendations that saved me a significant amount on my tax bill. The AI analysis was way more detailed than what my regular accountant could provide for these complex cross-border situations.

Just wanted to follow up - I decided to try https://taxr.ai after asking about it here. As someone living in Singapore but still filing US taxes, it was exactly what I needed. The system actually understood both tax systems and identified several foreign tax credits I'd been missing for years! It explained why my Foreign Earned Income Exclusion wasn't applying to certain investment income (which I never understood before) and showed me how to properly report my Singapore retirement accounts to avoid future problems. I've been dealing with this headache for years using expensive accountants in both countries who never fully understood my situation. This actually saved me over $3,200 on this year's return by correctly applying tax treaty provisions I didn't even know existed. Totally worth it for anyone dealing with cross-border tax issues.

So I had the EXACT same question a couple years ago when my crypto went up like crazy. After trying for WEEKS to get someone at the IRS international division to clarify this, I discovered https://claimyr.com and it was a total lifesaver. You can see how it works at https://youtu.be/_kiP6q8DX5c Basically, they got me connected with an actual IRS agent who specializes in international taxation in less than 20 minutes when I had been getting disconnected for days trying on my own. The agent was able to walk me through exactly how this works with the exit tax and foreign income rules. Turns out there's a whole department that specifically looks for this kind of "temporary expatriation" to avoid capital gains, and they have ways to determine if your move was legitimate or just for tax avoidance. The agent told me they look at factors like where you maintain homes, bank accounts, family connections, and how long you actually stay abroad.

I need to apologize for my skepticism about Claimyr. After posting that comment, I was still stuck with my international tax issue and getting nowhere, so I figured I had nothing to lose by trying it. Well, I'm eating my words now. After THREE MONTHS of trying to reach someone at the IRS international division about tax obligations from when I was working in Japan, I got connected to an actual IRS agent in 17 minutes. Seventeen minutes! The agent was able to pull up my file and explain exactly which forms I needed to amend for the foreign income I received. They even emailed me the specific instructions while we were on the call. Problem that had been stressing me out for months was solved in one phone call. Sometimes it's worth admitting when you're wrong, and I was definitely wrong about this service.

Don't forget the substantial presence test too! Even if you're not a citizen but spend too many days in the US (basically 183 days or more in a year, or using their weird formula over 3 years), you're still considered a US person for tax purposes. I've seen digital nomads get caught by this - they thought they were tax residents of nowhere but ended up owing the IRS because they spent too much time in the US. The strategy you're describing only works if you truly relocate long-term AND give up your citizenship, and even then the exit tax might eat up a lot of those gains you're trying to protect.

there's a guy on youtube who actyally did this. he moved to portugal because they had a 0% tax on crypto at the time (i think they changed it now). but he had to actually MOVE there, get residency, wait the required time, and then he could sell tax free. but he also kept his US citizenship which means he still had to file US taxes even tho he didn't have to pay portugese taxes. im pretty sure he used the foreign tax credit but since portugal wasn't charging him tax he couldn't offset much of the US tax. so tl;dr: it doesn't work like you think unless you also give up your US citizenship which is a whole other expensive mess.

This is a fascinating discussion that really highlights how complex international tax planning can be! As someone who's been researching this exact topic for my own situation, I wanted to add a few key points that might help others: The "exit tax" mentioned earlier is really the biggest gotcha here. Even if you renounce citizenship, if you meet certain wealth thresholds, you're treated as if you sold all your assets on the day before expatriation - so you'd pay capital gains on unrealized gains anyway. Also, there's something called the "covered expatriate" rules that can create ongoing tax consequences for your US citizen family members if they inherit from you later. The IRS really has thought through these loopholes extensively. For those considering legitimate long-term relocation (not just tax avoidance), it's worth noting that many countries with favorable tax rates are also making their programs more restrictive. Portugal changed their crypto rules, Malta has tightened up their residency requirements, and several Caribbean nations have raised their investment thresholds. The reality is that for most people, the costs and complexity of truly relocating internationally far outweigh the tax savings unless you're dealing with very substantial amounts. Sometimes the best strategy is just proper tax planning within the US system.