Do we have to pay capital gains tax on foreign property owned for more than 25yrs?

Question

My husband - a U.S. citizen, recently sold his portion of property in Greece that his father gave him over 25 years ago. Does he have to pay capital gains tax on the income from the sale of the property?
My head is spinning trying to read through all the tax laws!

Answer 1

A U.S. citizen should (read must) include worldwide income in an individual return. Following U.S. law, your husband's basis in the property in his father's basis since it sounds like it was a gift while his father was alive. Thus, he has a long-term capital gain to report, taxed at the lower capital gain rate.

The saving grace is that if Greece also taxes the transaction, a foreign tax credit should be available (use Form 1116) to credit against the U.S. tax. Depending upon Greece's tax rate compared to the U.S., the credit will be up to the amount of U.S. tax paid on the gain. If you look at this carefully, you'll see that if the transaction is not reported to the U.S., a lower tax is paid to the U.S. and Greece gets its tax as well. Why not do it the right way, report worldwide income to the U.S., take the foreign tax credit, and end up paying the lower tax to the U.S. via the credit route?

Answer 2

Yes, although if he pays a tax on the sale in Greece, he may be able to deduct that from what he owes here.

Answer 3

Yes.

It will be at the lower Capital Gains rate though.

Answer 4

The taxable capital earnings it 0.5 the earnings. the extremely share relies upon on your earnings and province of position of abode. You upload 0.5 the capital earnings on your earnings (like general earnings) and pay tax on that. in case you immigrated to Canada, and owned the valuables before you arrived the following, the captial earnings is depending on the upward thrust in value because you arrived the following. it really is, the price base of the valuables is its honest marketplace value once you arrived the following.

Answer 5

Call the IRS and ask them.