How to report sale property abroad? (2024)

If you are a US citizen orresident, you are required to file a US tax return for income from allsources both domestic and foreign. Therefore, you will need to report the 2015 sale of this UK Condo(converted into US dollars) on your tax return as the sale of a capital asset.To know the actual amount of the capital gain or loss on this sale, you willneed to know not only your sale's proceeds (in USD) but also your basis (in USD). Your basis is usually thepurchase price plus any capitalimprovements made to the property (all in USD). (If she was only a half owner of the property, just half all the sales and basis information)

TheInternal Revenue Service has no officialexchange rate. In general, use the exchange rate prevailing (i.e., the spotrate) when you receive the property, made any capital improvements and sold theproperty. Please refer to the following IRS links for more information about ForeignCurrency and Currency Exchange Ratesand YearlyAverage Currency Exchange Rates

To enter this transaction in TurboTax, log into your tax return and type "investment income (gains and losses)" in the search bar then select "jump to investment income (gains and losses)". TurboTax will guide you in entering this information (see step 6 below)

Alternatively, To enter thistransaction in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home& Business)
3. Next click on “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Investment Income”
5. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section) (see Screenshot #1)
6. The first screen will ask if you sold any investments during the current tax year (This includes any sale of real property held as an investment property so answer “yes” to this question)
7. Since you did not receive a 1099-B, answer “no” to the 1099-B question
8. On the next screen you will enter the sales information as follows
1. Description – usually the address of the property sold
2. Date Sold – Date you sold the property
3. Date Acquired – Date you the property
4. Sales Proceeds – Total amount received for the property (in USD)
5. Cost Basis – cost plus any capital improvements (in USD).
6. Adjustment Amount – leave this box blank (see attached screenshot #2)

Click this link forfurther information about reportingthe sale of a capital asset

If you paid foreign taxeson the this transaction,you will be allowed an offset for these foreign taxes on your US taxreturn.If you take a foreign tax credit, your US tax liability willbe reduced by the amount of taxes that you would have paid if the transactiontook place in the US (see this link ClaimForeign Tax Credit). If you take a foreign taxdeduction on Schedule A, you will be allowed to deduct the full amount of theforeign taxes paid but you will need to itemize (which could limit your abilityto take the full deduction). The TurboTax software will help you determinewhich of these options will lower your overall tax liability.

Currently the maximum capital gains rate in the US is 20%.Depending on your tax bracket, you may owe more than 20% due to such factors asAlternative Minimum Tax (AMT) and the additional Net Investment Income Tax(NIIT) of 3.8%

Please note : If you have foreign bank accounts, you mayberequired to file a Report of Foreign Bank and Financial Accounts (FBAR)if are a US citizen or resident and:

1. youhad a financial interest in or signature authority over at least one financial account located outside of the United States; and
2. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

To be directed to the US Treasury Government Website toprepare a Report of Foreign Bank and Financial Accounts, click FBAR (TurboTax does not support this form)