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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15334
Experience:  15years with H & R Block. Divisional leader, Instructor
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My name is ***** *****. looking tax expert in foreign real

Customer Question

my name is ***** *****. looking for a tax expert in foreign real estate and overseas wire transfers.
JA: Thanks. Can you give me any more details about your issue?
Customer: I sold my primary residence in another country and wired less than 100,000 but more than 10,000 to my bank in the US which I then used to pay off a second mortgage on my home.
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Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
Additional details: My mom, sister and I owned an apartment overseas with 25%, 50% and 25% ownership respectively. It was my sister's primary residence up to a year before the sale of the apartment. She got her green card 6 months before the sale and moved to the US but doesn't own real estate here. We sold the apartment and wired more than 10,000 but less than 100,000 from a temporary account in the foreign country to a US bank account owned by me. I then wired this money to pay for a second mortgage on a home my mom owned with my stepdad. What are the tax implications on these transactions?
Expert:  Robin D. replied 1 year ago.


The wire of the funds is not a taxable event. If you sold your primary resident (owned and used as your main home for 2 out of the last 5 years prior to the sell) then you can exclude up to $250,000 of the gain if single and up to $500K if married filing joint.

Using the funds to pay for a second home is not relative. If you had more gain than you can exclude you pay tax on the gain.

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Expert:  Robin D. replied 1 year ago.

The apartment you are taxed on because it was not your main home. SO the gain is taxable to you on your portion of ownership.

Forgot about that sale for a second.

Expert:  Robin D. replied 1 year ago.

If you need clarification ask about one property at a time

Expert:  Robin D. replied 1 year ago.

Please respond

Customer: replied 1 year ago.
I do have a few more things to clarify about this. So the exclusion applies to foreign primary residences the same as domestic in the US? What kind of paperwork would I need to show for any renovations done on the apartment because it was all done cash since no one really worked on the book in Ukraine? I should also note that we paid 10,000 directly to the previous owner of the apartment in 1994 as part of a deal to trade our 2 bedroom apartment for the 3 bedroom (which we sold), how can I show that as a deductible? There's barely any paper trail of that transaction with the previous owner and we don't even know if we can still locate them.
Expert:  Robin D. replied 1 year ago.

Yes it would. IRC section 121 and the related regulations make no distinction between a principle residence located in the U.S. or a foreign country.

You would need receipts that show any improvements. If you have none the you cannot claim the improvement.

Your cost is the amount you paid plus the apartment you traded. All I can advise is that is you are audited and have no proof to substantiate the claims then the IRS will disallow them

Expert:  Robin D. replied 1 year ago.

You left with responding further.