Hello,
Father inherited foreign property 20 years ago with brother, half for each. This would be original FMV.
Years later, the structure was torn down and rebuilt into multiple apartments.
The builder was alloted some apartments in return for the construction.
Father and brother each left with one apartment each.
The two apartments were now worth significantly more than the original property FMV.
It would seem the cost basis for father's inheritance would now increase due to a capital improvement.
Should that increase be the difference between the value of the apartment when completed in local currency
and the original FMV?
Example, original FMV of father's share 50. Value of apartment when completed by builder, 80.
Sale of father's apartment in 2022 at 100.
So FMV of 50, add 30 to cost basis for capital improvement. Sales proceeds of 100.
And each should be converted to USD for the year they ocurred?
Example inheritance 2000, 50 into USD at 2000 rate.
Capital improvement in 2010, 30 into USD at 2010 rate.
Sale proceeds in 2022, 100 into USD at 2022 rate.
This property was never lived in or rented.
So additional bonus question, can all taxes, maintenance, utilities paid over the decades be deducted from
from sale proceeds? Seems, yes, but not 100% certain.
Thank you for any clarification.
