how to report selling a foreign property

You are correct that you do not need to file Form 3520, since your parents are not foreign persons. However, because you sold the home in 2025 and are receiving the funds in 2026 through a foreign bank, there are several tax reporting rules to address for both the sale and the foreign accounts.

And, to confirm there is no gain, you must establish your cost basis in the gifted property.

When receiving property as a gift, your basis for calculating a gain is generally the donor's adjusted basis at the time of the gift, plus any gift tax they paid.

If you sell the property at a loss, your basis is the lesser of your parents' adjusted basis or the Fair Market Value (FMV) of the house on the date you received the gift.

If you sell the house for an amount that is less than your parents' basis, but more than the FMV at the time of the gift, you have neither a taxable gain nor a deductible loss.

Even if there weren't any capital gains, you must report the sale of this asset on your federal return. 

To report your home sale in TurboTax, do the following:

1. Go to Wages & Income
2. Scroll down to Investment Income
3. Select Stocks, Crypto...Other
4. Select the Other box (land, second home, 1099-S)
5. Click the drop down and select, "Second home" in the "What type of investment did you sell?"

If the house was strictly personal-use property and you sold it at a loss, the loss is not deductible. You must still report the transaction. However on Form 8949, you will see an  "L" in column (f) to indicate a nondeductible loss, and an offsetting adjustment amount in column (g) so the calculated net gain or less becomes zero.

Regarding the timing of the sale vs. receipt of proceeds, if there were a gain, you would typically use Form 6252, Installment Sale Income, to report the gain in the year you actually received the payment. Or, you can opt out of the installment method and report the entire gain on your 2025 tax return.

However, if there is a loss, the installment sale method is not allowed for a sale that results in a loss. You must report the entire transaction in the year the sale occurred, even though you did not receive the funds until this year.

And, since you are dealing with a bank in Vietnam, you must be mindful of the U.S. Foreign asset reporting requirements:

You may also be required to file Form 8938 (Statement of Specified Foreign Financial Assets) to your income tax return if the total value of your foreign financial assets exceeded $50,000 ($100,000 MFJ) on the last day of the year, or $75,000 ($150,000 MFJ) at any time during the year.

If the aggregate value of your foreign accounts exceeded $10,000 at any time during the calendar year (including the bank account holding your house proceeds), you are required to file a Form 114 (FBAR). This form must be filed online directly with the Financial Crimes Enforcement Network (FinCEN and is separate from your income tax return. Learn more about FinCen here.