Foreign Tax Credit on Sale of Property - Why is Tu...
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Level 2

Foreign Tax Credit on Sale of Property - Why is Turbo Tax Asking First Year you are Eligible?

I am entering Foreign Tax Credit for the Taxes I have paid on Sale of property in a foreign Country.

Why is Turbo Tax going into AMT screen and asking First Year you are eligible? Next screen is 

Elect Simplified Method.

This is a simple Sale of property and I am nowhere near the AMT $ amount.

Can someone help me on this I am going in circles.

Thanks in Advance

2 Replies
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Level 11
Level 11

Foreign Tax Credit on Sale of Property - Why is Turbo Tax Asking First Year you are Eligible?

@dhirenk2003 , assuming that you are US citizen/Resident ( Green Card )/ Resident for tax purposes, you are taxed on world income.  Thus  sale of property/ asset is taxed  and therefore TurboTax will go through AMT questions ---  please tell me more about the sale of property:

1. How did you acquire the prop --- buy / inheritance

2. How did you use the property -- own residence / residence of relatives ( i.e personal use / 2nd home )/ rental income

3. when did you acquire , when did you dispose of the prop, did you sell to a relative or at arm's length

4. did you have to pay capitals gain  to the foreign taxing authority ( India ? ), and other expenses such as transfer taxes etc.   Note that some countries like India  uses indexing before computing capital gains and the longterm rules are different -- US does not use indexing  and therefore  capital gains  may be different  for US tax purposes.

Namaste

 

pk

 

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Level 2

Foreign Tax Credit on Sale of Property - Why is Turbo Tax Asking First Year you are Eligible?

Thanks for your response.

Here is my reply to your qs:

1. I bought the property(condo) when I was a resident of India. (20 years back) for my own residence.

    It was not a rental - locked and sitting there.

2. Sold in 2019- on the market.

3. I paid Long Term Cap Gains tax in India.

Thanks.

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