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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 14198
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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My grandparents had a house in Vietnam. They passed away and

Customer Question

My grandparents had a house in Vietnam. They passed away and so this house is "owned" and managed by their children, who all live in the United States. One day, they plan to sell this house. If and when they do, will the children have to pay taxes since their bank accounts are in the U.S.?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.
Thank you for your question, and thanks for using Pearl.com. I understand that you have a house in Vietnam that belonged to your grandparents, and that you are curious if you or your parents will need to pay capital gains tax when you sell the house.
In the United States, residents and citizens are taxed on their worldwide revenue. It does not matter that their bank accounts are in the United States, what matters is their tax residency. If they live in the United States then even if they are not citizens of the US, they are treated as such for tax purposes.
When they sell the house, they will pay capital gains tax. Their basis in the house is the fair market value of the house on the date of the death of your last living grandparent. Any amount above that basis will be subject to capital gains tax, just as any other similar transaction in the US would be taxed.
The long term capital gains rates are 15% for those making less than $400,000 per year ($450,000 if married) and 20% for everyone else. This just changed as a result of the recent fiscal cliff deal. If you want to read about this on the web, visit the following address:
http://news.morningstar.com/articlenet/article.aspx?id=579859
I apologize for the formatting but I am unable to provide a hyperlink, so please copy and paste the URL in your browser address box if you wish to view it.
So, the short answer to your question is yes - the sale of your grandparents' house in Vietnam will be taxed in the US if the children who inherited the house live here and are tax residents/citizens. The location of the bank account is irrelevant to whether or not the transaction is taxed.
Please follow up with any additional inquiry or information, if you feel it's pertinent to the situation. Thanks again for using Pearl.com and have a happy and safe 2013.
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You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

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