Receiving donation of foreign property

[giuliana]

Hi, I am about to receive a donation of a property located in Italy from my dad. The value of the property is more than $100k and I am not going to sell it. I know that I'll need to submit the 3520 form because the value exceeds $100k. My question is if I'll need to pay us taxes on the donation. Is it considered capital gain? 

Thanks

[DaveF1006]

No, foreign gifts are not taxable and this is not considered a capital gain.  The only requirement you are faced with is filing the 3520 reporting the gift.

[giuliana]

thank you!

[ErnieS0]

You may have a capital gain or loss when you sell the property. U.S. citizens and resident aliens are taxed on worldwide income so the sale of a property in Italy would generally be a taxable event.

You don’t say whether this is business, investment, or personal property. Capital gains from all types of property are taxable. You can deduct losses from the sale of a business or investment property, but losses from the sale of personal property (second home) are not deductible.

The cost of figuring the profit/loss from the sale of gifted property depends on whether it was sold for a gain or loss.

See What is the basis of property received as a gift?