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In order to provide a specific IRS reference, I need to know what your residential status is.
Assuming that you are a U.S. Green Card Holder, the same tax rules that apply to U.S. citizens will apply to you. This means that if you incur a gain on the sale, you will be required to pay capital gains tax. As the property was inherited upon your father's death, the Step-Up in basis applies, which means that the cost basis of the property is the fair market value of the property at the time of your fathers's death.
Let's say that when your father died, the property was worth $400,000. That would be the cost basis. The property sells for $700,000, that's a $300,000 gain. The home sale exclusion does not apply to inherited property.
There are two qualifications that have to be met in order to qualify for the exclusion.
1) Ownership: If you owned the home for at least 24 months (2 years) during the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement.
2) Residence: If your home was your residence for at least 24 of the months you owned the home during the 5 years leading up to the date of sale, you meet the residence requirement. The 24 months of residence can fall anywhere within the 5-year period. It doesn't even have to be a single block of time. All you need is a total of 24 months (730 days) of residence during the 5-year period.
If you meet both requirements, the exclusion will qualify. **Specifically note the 2nd requirement**
There is no tax on an initial inheritance, however, capital gains tax can come into play if property is sold and qualifications are not met to meet exclusion requirements. As you seem displeased with my responses thus far, I will opt out and let someone else take it from here.
Sorry for the delayed response. I was away from the computer. If the cash that you inherited is $100,000 or more, you need to complete the Form 3520, which is an information form. If the amount of cash inherited is less than $100,000, there is no reporting requirement. SEE BELOW:
Reporting RequirementsYou must file Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, if, during the current tax year, you treat the receipt of money or other property above certain amounts as a foreign gift or bequest. Include on Form 3520:
Gifts or bequests valued at more than $100,000 from a nonresident alien individual or foreign estate (including foreign persons related to that nonresident alien individual or foreign estate);
Gifts valued at more than $13,258 (adjusted annually for inflation) from foreign corporations or foreign partnerships (including foreign persons related to the foreign corporations or foreign partnerships).
You must aggregate gifts received from related parties. For example, if you receive $60,000 from nonresident alien A and $50,000 from nonresident alien B, and you know or have reason to know they are related, you must report the gifts because the total is more than $100,000. Report them in Part IV of Form 3520. Treat gifts from foreign trusts as trust distributions you report in Part III of Form 3520.
File Form 3520 separately from your income tax return. The due date for filing Form 3520 is the same as the due date for filing your annual income tax return, including extensions. You file an annual Form 3520 for all reportable foreign gifts and bequests you receive during the taxable year. See the Instructions for Form 3520 for additional information.
Link to Form 3520/instructions:
Let me know if this clarifies matters for you.
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