Taxes due on money received for sale of land?

Question

If someone sells a piece of land that he or she owns in a foreign country, is this going to have to be reported as income to the IRS for taxes that are due?

Answer 1

If you are subject to US income taxes then all of your income subject to tax is reportable. Gain on the sale of land wherever located is taxable income.

The gain or loss on the sale of the land is a capital gain (loss)which is reported on Line 13 of Form 1040, using Schedule D, as well as Form 4797 if the property was business property.

Answer 2

Absolutely! This is a capital gains sitaution and is taxed exactly the same as if the land was located in the US. However, if the foreign country levies any income tax on the sale you can take a credit against your US tax liability for the foreign income taxes paid. File Form 1116 with your return to claim the credit for the foreign income taxes paid.

Answer 3

One aspect that does not appear to be covered or considere is, would you have to pay a tax on the gain that you made in this foreign country. The United States, I am sure, is not the only country to tax income derived from various sources. If you did pay a tax to a foreign country, there is a foreign tax credit available to you on form 1040.

Answer 4

Gee, did anyone read the post? "Friend of the Family Passed On YEARS ago" So the cost basis is what the property was worth YEARS ago. If it's gone up in value, there WILL be capital gains and that portion *is* taxable to the poster. The lawyer will have to do a 1041 return. He will show the sales price, less the cost basis, less expenses of sale, less *his* expenses, taxes paid, etc. If there is gain, it will be passed through on the 1041, schedule k-1. There will be 2 boxes on the form. Long term capital gain, which is taxed at 15% and 1250 gain (taxed at ordinary rates up to 25%). Ask the lawyer for the rough numbers of the k-1 BEFORE you spend the money.

Answer 5

If you find out you are responsible for paying taxes on the sale of land and it was a good sum of money you may consider making an estimated payment, You don't want to find out next year that because of the sale of the land that you didn't pay in your fair share of taxes during the year and get penalized.

Answer 6

Yes, IRS wants you to report your worldwide income.

If you pay taxes in the foreign country, you can fill Form 1116 to claim Foreign Tax credit on line 47 of Form 1040.

If the property is your home, then the same exclusion applies that applies to selling your home in the U.S. that is
You can exclude up to $250,000 of the gain on the sale of your main home if all of the following are true.
* You meet the ownership test.
* You meet the use test.
* During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home.

Answer 7

Generally, yes. But you may qualify for a foreign tax credit if you also pay taxes in the other country and that country is part of a tax treaty with the US.

Answer 8

I think so. It's better to pay the taxes in the year of the sale rather than letting the IRS catch you and add interest. But your best bet is a tax attorney.

Answer 9

i would tend to believe so.. we are money grubbing americans.. honestly would you think the government would allow money to come into this country by any means and not find a way go get some of it? i diddnt either when my grandmother had a share of her parents land from back in ireland, sold it and got the money only to find out that she could only keep 15% of her share. damn governments