DaveF1006
Expert Alumni

Deductions & credits

Yes, if you sell your property and pay taxes in the country, you may apply for a Foreign Tax credit in Turbo Tax to apply a credit against the taxes already paid. Keep in mine the Foreign Tax Credit is a non-refundable credit which reduces your tax liability to zero. If you tax liability is reduced to zero, the unused credit can  carry back for one year and then carry forward for 10 years the unused foreign tax credit.

 

For the state return in North Carolina, there is no foreign tax credit that can be applied. Foreign tax credit is strictly federal. if you invest in bonds and if you pay taxes, you can apply the foreign tax credit the same as above. Your gains aren't tax free however and are taxed the same as domestic bonds. You will be able to claim the long term capital gain rate on your return if you are entitled to it.

 

As far as adjusting the difference paid in taxes, you will not do that on your own. The Foreign Tax Credit does that for you. 

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