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How to report the sale of a property outside US? How to

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claim the taxes paid abroad...
How to report the sale of a property outside US? How to claim the taxes paid abroad on the profit made by selling property overseas?
Submitted: 4 months ago.Category: Tax
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Answered in 4 minutes by:
10/2/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,483
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi - My name's Lane.

...

THe income is reported as a capital gain, just as if the property were in the US (Assuming you are a tax resident - U.S. Citizen, Green Card Holder, or one passing the Substantial Presence test).

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Then you can take the FTC (Foreign Tax Credit). See this: https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit

...

You may also be able to take a treaty based position, depending on the country and the terms of any existing double taxation treaty between the U.S. and that country.

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Customer reply replied 4 months ago
Foreign country is India
Customer reply replied 4 months ago
Do we have to show the details of purchase n sale or just profit made? What kind of support documents needed
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 4 months ago

You'll just show the capital gain on schedule D (actually the "feeder form" for that is form 8949 which will then flow to the schedule D)

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Capital gain = Sales price - basis

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Where Basis = either purchase price + improvements OR fair market as of the date of death, it you received through inheritance.

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Then the Foreign tax credit is taken on form 1666, based purely on the actual taxes paid in India

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,483
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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