Australian land sale capital gains

[lusanaali]

I sold land in Australia and there were some capital gains on it.
I have entered it in as part of the income, it's now saying that I owe a lot of money to the IRS. What is the right way to report this land sale?

[Fern · Accepted solution]

As a US taxpayer, you worldwide income is subject to US taxes.  You will recognize a gain or loss on the sale of the property in the same way you would if the property was located in the United States.

In Turbo Tax, the sale will be entered in the Investment section (unless you are a real estate professional, then it would be entered on Schedule C).

• Select Federal Taxes
• Select Wages and Income
• Select Show More at Investment Income
• Select Start at  Stocks, Mutual Funds, Bonds, Other
• Respond Yes – you sold something
• Respond No – you did not receive a 1099B
• Choose Land as the asset sold

Enter the information about the sale of your land.  Be sure to include your cost basis.

If you paid or accrued foreign taxes to a foreign country for this sale of land, you may be able to take either a credit or an itemized deduction for those taxes. Go through the Foreign Tax section in Deductions and Credits.

• Select Federal Taxes
• Select Deductions and Credits
• Select Show More at Estimates and Other Taxes Paid
• Select Start next to Foreign Taxes