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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7119
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I am a usa citizen and inherited a property in scotland from

Customer Question

I am a usa citizen and inherited a property in scotland from my uncle who is british. the sale of the house is soon and i was told i would have to pay capital gains here in the usa. how much? and is there anyway i can avoid or lessen the tax amount as i have been informed it is high.
JA: The accountant will know how to help. Is there anything else important you think the accountant should know?
Customer: I think that is it.. I just need to know is there alternatives to invest this money to reduce the tax burden currently.
Submitted: 8 months ago.
Category: Tax
Expert:  Stephen G. replied 8 months ago.

Hello, my name is***** goal is to give you a complete & accurate answer. I am working on your request now & I will respond as soon as possible.

Customer: replied 8 months ago.
i have yet to receive an answer and am very confused by this. they tell me my answer is ready but there is no answer available. I am not sure if it is ready even though they sent me an email saying it was....i am very confused and this is starting to be stressful. I also do not own a cell phone so cannot be texted. Can someone tell me what I am doing wrong.
Expert:  Stephen G. replied 8 months ago.

Well, you were partially mis-informed.

The sale is indeed subject to capital gains tax here in the USA.

However, what is important is how you determine your tax basis in the property for computation of gain.

Under REV. RUL. 84-139, 1984-2 C.B. 168, a US Citizen who inherits real property located in a foreign country from a non-citizen determines his tax basis in the same way that it is determined if the property were located in the US.

For purposes of reference, here's the actual code sections that apply:

Foreign real property that is inherited by a United States citizen (A)from a nonresident alien(B) will receive a step-up in basis under sections 1014(a)(1) and 1014(b)(1) of the Code. A’s basis in the real property sold is the fair market value of the property on the date of B’s death, as determined under sections 1014(a)(1) and 1014(b)(1) of the Code.

So, if your uncle died within 9 mos to 1 year prior to the date of sale, the IRS, absent any information to the contrary, will normally accept the gross selling price on the date of sale as the fair market value of the property on the date of death.

What that translates to in plain English, is that you will have no capital gain and probably a capital loss.

Let me finish........................

Expert:  Stephen G. replied 8 months ago.

There's no need for a telephone call. Hold on, these things take time to get right.

Expert:  Stephen G. replied 8 months ago.

Basically, you will have to report the sale, but due to any commissions or other expenses of sale, you may actually have a capital loss on the transaction.

When did your uncle die, what date approximately if you don't have the exact date handy?

Approximately what date do you expect the property to sell?

Steve G.

Expert:  Stephen G. replied 8 months ago.

You aren't doing anything wrong; a telephone consultation is an option, not a requirement.

We can continue to communicate this way until you fully understand; there's no need to talk on the phone unless you want to. It is not necessary.

When you are clear as to how this should be handled, then please provide a rating for me as that is the only way I will receive credit for assisting you today.

Can you answer my questions on the dates and/or do you have any other follow-up questions?

Hello? Are you still here?

Let me know when you return by typing something.

Steve G.

Customer: replied 8 months ago.
i sent you the information and am trying to connect with you but something is not working on this site with my computer. I am not upset with you but the way this site is working. i hope this goes through otherwise i will have to contact the site.
Expert:  Stephen G. replied 8 months ago.

Did you receive my answers to your questions indicating that you must report the sale but most likely have a capital loss?

Let me know, I thought you were gone & I've been with another customer.

Please remember to provide a rating.

Thanks very much,

Steve G.