You need to enter the sale of your foreign property in your return. The gain is calculated by translating the purchase price using the exchange rate on the date of purchase, the cost of capital improvements using the exchange rate on the date the improvements were made and the exchange rate to USD on the date of the sale.
If this was your primary residence before moving to the US, you can enter it as your primary home. Enter Sale of Home in the Search box at the top of the screen.
If this was a second home, you would enter it as a sale of investment. In the search box enter sold second home and select Jump to
- Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2019? screen.
- If you land on the Here's the info we have for these investment sales screen, select Add More Sales.
- Answer No to the 1099-B question.
- On the next screen, select Second Home (choose this also for inherited homes) or Land and answer the questions to finish entering your sale.
There is a secondary calculation if you had a foreign mortgage on the home you sold.
The Exchange Rate Gain from paying off a mortgage denominated in a foreign currency is treated as a separate transaction and is calculated by translating the amount of the loan using the exchange rate at the time the loan was originated and the exchange rate at the time the loan was paid off. The resulting “gain” is taxable as “ordinary income”
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