I sold a property in Europe, do I owe taxes here in the USA?

Question

I sold the property and had the funds wired to my account here in the USA.
I used most of the funds to buy a house and pay off the mortgage on my existing house.
I would like to know if I owe any taxes here in the USA.

Answer 1

You betcha! US citizens and residents are taxed on their world wide income from all sources.

Foreign real estate transactions are no different from domestic ones. They qualify for the exclusion on the gain if you lived in it as a principal residence for 2 of the 5 years immediately prior to the sale. Any gain not excludable under that rule is taxed as any capital gain based upon how long you owned the property.