Selling apartment in Europe

[hightoweradana]

In 2016 my sister bought an apartment for me in her name with my money ( I have transfer slip). A year later, in 2017, when I came to visit, she transfered (my apartment), to me as a gift, so there is no capital gain for her, as she just gifted to me. 

During another five years I upgraded my apartment and live there for two years (not consequtive, but total 2 years. 

This year, I decided to sell my apartment when living there. My income in California will be just about $ 5 000,- dollars  (1099 intrest), since I been living in Europe this year.  What am I looking at when it comes to doing my taxes for year 2023?  I am married, no dependents. Thank you very much. 

[Anonymous_]

What do you need to know, exactly? 

You have owned and used the home as your main home for the last 2 out of 5 years leading up to the sale and, apparently, your spouse has only used the home as the main home for 10 months. Is that correct? 

[hightoweradana]

No, my spouse also lived there for 2 years. My question is. Will we be exempt from capital gain? And if not, will we be able to get 27 000,- personal exemption (we lived in Europe for 10 months), and use it as a credit to minimize our taxes from sale? We're not paying any taxes oveseas. Thank you.

[Opus 17]

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@hightoweradana wrote:

No, my spouse also lived there for 2 years. My question is. Will we be exempt from capital gain? And if not, will we be able to get 27 000,- personal exemption (we lived in Europe for 10 months), and use it as a credit to minimize our taxes from sale? We're not paying any taxes oveseas. Thank you.

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You really don't need to post twice, you could have added your extra comments under your original post.

See IRS publication 523,

https://www.irs.gov/forms-pubs/about-publication-523

No one is "exempt" from capital gains tax.  The sale of your apartment is subject to the same capital gains tax as if it was located in the US.  You may also be taxed on the sale by the country where you live—if so, you can claim a credit or deduction on your US tax return for foreign taxes paid.

If this was your main residence, you can exclude the first $250,000 of gain from tax ($500,000 exclusion if you are married filing jointly and both spouses qualify). If the gain is more than your exclusion, it is subject to capital gains tax on your US tax return.  

Marriage imparts ownership but not residency.  If you meet the ownership rule, then your spouse does too, by marriage.  But you and your spouse much each meet the residency rule separately (such as, if your spouse lived in the home as their main residence before you got married.)