topic I just sold the house outside USA. Do i need to first file return in that country and then file in USA with foreign tax credit? in Deductions & credits

I just sold the house outside USA. Do i need to first file return in that country and then file in USA with foreign tax credit?

dars_indi — Thu, 12 Sep 2019 12:56:46 GMT

Re: I just sold the house outside USA. Do i need to first file return in that country and then file in USA with foreign tax credit?

Critter — Thu, 12 Sep 2019 14:31:04 GMT

That is the correct way to handle that so you know the amount of taxes paid in that country for the US return.

Re: I just sold the house outside USA. Do i need to first file return in that country and then file in USA with foreign tax credit?

Anonymous — Thu, 12 Sep 2019 16:30:19 GMT

what country? some don't have an income tax. then there are tax treaties. so I can't say for sure if you would pay any taxes in the foreign country on the sale or even be required to file a return. you might want to someone in the know. some countries with an income tax don't use a calendar year like in the US.

Re: I just sold the house outside USA. Do i need to first file return in that country and then file in USA with foreign tax credit?

dars_indi — Thu, 12 Sep 2019 16:54:43 GMT

This is for India. I am sure I have to file taxes in INDIA. Their Calendar year ends on 31 March . The question is do I need to get an extension on my US taxes , file the Indian tax , pay taxes in India in April and then file the US taxes ?

Re: I just sold the house outside USA. Do i need to first file return in that country and then file in USA with foreign tax credit?

pk — Sat, 14 Sep 2019 02:50:34 GMT

@dars_indi , while agreeing with @Anonymous , some items you should consider --- (a) basis in the property-- if bought , then cost of acquisition + cost of any improvements --- converted into US$ of the day; if inherited then it is the Fair Market Value on the date of death of the decedent + cost of any improvements; if gifted, then it is basis of the donor ( usually his/her acquisition cost + cost of improvements ) etc.; Note that India , unlike USA , indexes basis per CPI. (b) if the property was rented out while you were a citizen/resident( Green card ) / resident for tax purposes , then depreciation has to be recognized as part of the adjustment to basis.; (c) all costs related to sale of property are adjusted against the sales price ( commission / transfer tax / fixing up the property for sale etc. etc. ); (c) the gain per US computation, is taxable income -- any depreciation is treated as ordinary income and the rest of the gain may be eligible for capital gains tax treatment.

You fill out a form 1666 for dealing with foreign tax credit ( on income that has been taxed by foreign and US tax authorities ) but while all the foreign tax is recognized, the allowable amount is based on a ratio of foreign income to world income and any unallowed foreign tax can be carried forward and backward.

TurboTax will do all the work for you.

Namaste ji