Deductions & credits

It would be considered passive income for FTC purposes.

The gain/loss  is calculated for US tax purposes 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.   

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”  

These are entered in the investment section of TurboTax. prior to entering the information into Foreign Tax Credit section.

Follow these instructions: 

1. Open your return in TurboTax. (To do this, sign in to TurboTax and select Take me to my return button.) 

2. In the search box, search for sold second home and select the Jump to link in the search results. 

3. Answer Yes on the Did you sell any investments in 2018? screen.  

   • If you land on the Here's the info we have for these investment sales screen, select Add More Sales. 

4. Answer No to the 1099-B question. 

5. On the next screen, select Second Home (choose this also for inherited homes) or Land. Select Continue. 

6. Follow the instructions to completion.