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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15588
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hi, I have a question about international transaction. I sold

Resolved Question:

Hi, I have a question about international transaction. I sold a house recently in Ukraine that I inherited from my mom who passed away. Now I need to move $$ from the house to USA. Ukraine allows to do transaction as a gift from 1st relatives (as I understand parents to kids or husband to wife or vice versa). I'm a Green Card holder. If I move the money to my husband's account as a gift should I pay any taxes here?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

I'm sorry, but your requested professional is not online. However, I would love to help you.

Megan C :

On this transaction, you sold a house which is a capital asset. You would have to pay tax on the difference between the value of the house on the date of death of your mother and your selling price.

Megan C :

If you sold the house shortly after you inherited it, and there was no gain, then there is no tax on the amount.

Megan C :

However, if the proceeds were placed into an account in your name for more than $10,000 you will have to file form TDF 90.22-1. This is called the FBAR report, and it just declares to the US any foreign bank accounts you have with over $10,000 at any one time during the year.

Megan C :

You don't have to move your money as a gift to your husband - you can move it to yourself. There will still be no additional tax.

Megan C :

However, there's also no tax if you move it to your husband.

Megan C :

So, you pay no tax when you initially inherit the home. Then, you pay tax when you sell it - but only to the extent that the sales price exceeds the inheritance value (which is the value of the house on the date of death).

Megan C :

When you transfer the money you can transfer it to yourself or your husband...it doesn't matter - there's no additional tax

Megan C :

You will have to report your foreign bank account on the FBAR report.

Megan C :

That should be all for this particular transaction.

Megan C :

Is there anything else that you need assistance with today?

Customer:

ok, thank you. My mom passed away in Jan 2013. I sold the house in Sep 2013. There is no any taxes in Ukraine when I sold the house because it's inheritance from my mom who was my 1st relatives. I sold it for $45K and it's on my account in Ukraine right now. So what would you suggest doing for me as the best option. So as I understand I can transfer the just $10K per year to my own account here w/o paying any taxes, right?

Megan C :

No, you can transfer 100% of the $45,000 without paying additional tax. But, you have to pay tax on the difference between the house value in January and the house value in September

Megan C :

It should be about the same, so you should have minimal tax

Megan C :

You can't avoid that tax by gifting the proceeds.

Megan C :

But, you have to disclose that you have a bank account with over $10,000 in it -- there's no tax, it's just information reporting

Customer:

ok, but who could tell me how much $$ cost the house in Jan? And should I pay this minimum tax here or in Ukraine?

Megan C :

The min tax would be here in the US, and you would have to have an appraisal of the house. I don't know how they value homes in Ukraine.

Megan C :

Whatever similar homes were selling for in January would be the value.

Megan C :

Chances are that the value did not fluctuate

Customer:

ok but it's unclear for me who can give me the appraisal of the house in Jan. I know in Ukraine they did appraisal just before I sold it in Sep.

Megan C :

I'm not certain either. If property values have remained flat, you can assume that there was no gain

Customer:

and also who will ask me here how did I get the $45K if I don't pay any taxes when I move it here?

Megan C :

You're going to report the transaction on your tax return, it's just that there is no gain. YOu will show you received $45,000 but then you had a basis of $45,000 so you have no taxable gain.

Megan C :

No one is going to ask you where the money came from

Customer:

ok, so it's very easy as I see, right? so I move to my own account, then I fill out form TDF 90.22-1 next year with this info and that's it, right?

Megan C :

On your tax return, on schedule D you will show the sale of the house with no gain.

Megan C :

The TDF 90.22-1 is an informational report disclosing that you had a bank account overseas with over $10,000 in it

Customer:

ok. thank you. now I see. I never did taxes myself before so I asked a lot of stupid questions, sorry...

Megan C :

You did not ask one stupid question. YOu asked very good questions.

Megan C :

Is there anything else I can assist you with today?

Customer:

and thank you. and one more. If I decide to buy a house using these $45K this year will it be another line in taxes next year?

Customer:

or you suggest to do it next year? or it doesn't matter?

Megan C :

You never have to disclose when you purchase an asset

Megan C :

only when you sell it

Customer:

ok, I see

Megan C :

Is there anything else I can help you with today?

Customer:

no it's fine everything. the trouble is Ukraine doesn't allow to move money to yourself. just from 1st relatives. that's why I asked about moving to my husband. it's crazy country

Megan C :

Well, thankfully the US is a little different.

Customer:

yep with obamacare

Customer:

;-)

Megan C :

Yes, I know. If there's nothing else I can assist you with today, please rate my response as "excellent" so that I may receive credit for assisting today

Customer:

sure.

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15588
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 3 other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thanks, lana for your positive rating and generous bonus. Please come back and visit me any time you have a tax question that needs answered. It was a pleasure working with you today.

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Megan C
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Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level