Taxes on Land Sold Overseas

2 Replies

I owned a land overseas which I recently sold. The land was a gift from my father. I do not owe any income taxes in the country because I owned it for many years. It used to be my home country where I was born. However, now I'm a resident of the US and I've lived here for many years. I'm not sure if I owe any income taxes on the money received from the sale when I transfer the money here or even if I do not transfer the money. If so, are there any strategies to postpone the taxes (like 1031 exchange, etc.). Thank you!

Originally posted by @Michaela Pacesova :

I owned a land overseas which I recently sold. The land was a gift from my father. I do not owe any income taxes in the country because I owned it for many years. It used to be my home country where I was born. However, now I'm a resident of the US and I've lived here for many years. I'm not sure if I owe any income taxes on the money received from the sale when I transfer the money here or even if I do not transfer the money. If so, are there any strategies to postpone the taxes (like 1031 exchange, etc.). Thank you!

As a US Resident you will potentially owe tax on the sale of the property, regardless of the property's location and regardless of whether or not you repatriate (transfer) the proceeds back to the US. So you will need to calculate your gain/loss on the property for US tax purposes. If you don't bring the proceeds back (i.e., deposit the funds in a foreign bank) you may have additional information reporting for that as well. 

@Michaela Pacesova

As a US resident - you are required to report worldwide income on your US tax return. This includes income earned in the US and that earned abroad.

Please be mindful that when you report the sale on your US tax return to convert the currency if the transaction was not in USD.

Also - if the money went into a foreign bank account and the money exceeded more than 10,000 during the year - you may be required to report the bank account to the IRS or face significant penalties.

What were you doing with the property while you were living here in the united states?(rental, family lived in it, etc)
A 1031 is normally started prior to the sale of the property. You can't initiate a 1031 after you have sold the property if you have not reached out to a 1031 intermediary.

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