House sale in foreign country

[willow26]

I got married 2 years ago, and my spouse moved to US at that time. She is selling a home in foreign country which is only in her name. We have been filing taxes jointly here. How should I report the capital gains (less than $200K) of the home sale? She has lived there alone 2 out of last 5 years.

 

[davew9128]

How should I report the capital gains (less than $200K) of the home sale? She has lived there alone 2 out of last 5 years.

By reporting the sale of the property like you would any other home sale. By mindful of any currency gain or loss if there was an underlying mortgage in non-US currency on the property paid off in the sale.

 

[Taxing Matters]

I got married 2 years ago, and my spouse moved to US at that time. She is selling a home in foreign country which is only in her name. We have been filing taxes jointly here. How should I report the capital gains (less than $200K) of the home sale? She has lived there alone 2 out of last 5 years.

For all the details of the federal income tax treatment of the sale of a home see IRS Publication 523. Even though this home was outside the US the rules for computing the gain are the same except for the currency conversion issues that davew9128 mentioned.

 

[willow26]

Thank you very much for the information. I will take the currency conversion into consideration and just her $250K allowance will be enough to cover the capital gains. I can still file jointly without any problem.

 

[LdiJ]

Thank you very much for the information. I will take the currency conversion into consideration and just her $250K allowance will be enough to cover the capital gains. I can still file jointly without any problem.

Then you have nothing to worry about. Had there ended up being some taxable gain, you could have taken a credit for any taxes paid in the other country on the sale of the home. So it is possible that any US tax bite would have been small anyway.

 

[STEPHAN]

You might have to pay taxes in the foreign country.

 

[LdiJ]

You might have to pay taxes in the foreign country.

His wife might have to pay taxes in the foreign country. Odds are however, that the taxes would be directly levied on the proceeds of the sale if that is the case.

 

[davew9128]

His wife might have to pay taxes in the foreign country. Odds are however, that the taxes would be directly levied on the proceeds of the sale if that is the case.

And wouldn't be eligible for a US foreign tax credit on that tax where the underlying transaction wasn't taxed here.

 

[LdiJ]

And wouldn't be eligible for a US foreign tax credit on that tax where the underlying transaction wasn't taxed here.

Of course...it was a comment on "even if it was taxed here".