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Jonathan Tierney
Jonathan Tierney, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 307
Experience:  Tax Accountant at Praxair, Inc.
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US FEDERAL TAX LAW - INHERITANCE** I am a US citizen and my

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US FEDERAL TAX LAW - INHERITANCE**I am a US citizen and my mother holds a US green card. My father passed away two years ago (non-US citizen) and left us a fortune in our home country (Turkey).We inherited a home from my father which we are just about to sell (home is located abroad inTurkey). Will we have to pay any US taxes on the sale of the house we inherited from father? We did not buy the house, therefore we did not make a profit. We inherited it my father. Will I and my mother be liable to pay an US taxes from the sale of an inherited house abroad?Thanks.Olly
Submitted: 9 months ago.
Category: Finance
Expert:  Jonathan Tierney replied 9 months ago.

Hi, my name is ***** ***** I can help. As U.S. citizen's and/or green card holders, you are taxed on your income earned worldwide. For U.S. Tax purposes, your basis in inherited property is its fair market value determined as of the decedent's date of death, so you will need to come up with an estimate and/or appraisal to determine the value. However, if he has passed away recently you can probably assume the fair market value is going to be pretty close to its actual selling price. The gain is reported on Form 8949 and flows into Schedule D of your Form 1040. In addition, if Turkey places an income tax on the sale, you will be able to claim a dollar-for-dollar credit against your U.S. taxes up to the amount of U.S. tax on the gain.

Finally, you are required to report inheritances valued greater than $100,000 from a foreign estate by filing Form 3520, which you can find more about here: https://www.irs.gov/uac/About-Form-3520.

I hope this answers your question. Please let me know if I can clarify anything or answer any additional questions.

Thanks, Jonathan

Customer: replied 9 months ago.
Hi Jonathan-I am a bit confused with your answer because I consulted a US lawyer who told me this"No, there is no federal inheritance tax in the US and only a few states have a state inheritance tax. But this doesn't matter because the assets are outside the US. Anything outside the US is not subject to US laws because the US doesn't have jurisdiction over assets outside its legal or geographic boundaries.No, US estate tax laws don't apply to assets located outside the US borders. So if there were any estate taxes that were applicable they would be Turkey's estate taxation laws.So no, no inheritance taxes, no estate taxes."So my understanding is I would not have to pay any inheritance or estate tax?My father was not a US citizen or a green card holder.Thanks..
Expert:  Jonathan Tierney replied 9 months ago.

Yes, I should have answered you question more directly regarding the estate tax question. You are not liable for any estate taxes, but you could be liable for income taxes (Form 1040) on the sale of the residence, for any gain or loss on the property sale since the time you inherited it. In addition, as U.S. citizen or permanent resident the U.S. requires you to file Form 3520 if your inheritance is greater than $100K which is only informational as no tax would be due.

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