Not a rental property just land.
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You may need to include this sale on a US federal income tax return.
Yes, if you are a US citizen or resident. This is because US citizens and residents are taxed on worldwide income.
No, if you are a nonresident alien. Click this link for more information from the IRS on US Tax Guide for Aliens
If you are a US citizen or resident, you will need to report this transaction (in USD) as the sale of a capital asset.
The Internal Revenue Service has no official exchange rate. In general, use the exchange rate prevailing (i.e., the spot rate) when your NRA spouse received the income. Please refer to the following IRS links for more information about Foreign Currency and Currency Exchange Rates and Yearly Average Currency Exchange Rates
The sale of bare land is considered an investment and the sale is treated as the sale of a capital asset. (However, no capital loss will be allowed on the sale of land that was or would have been used for your primary personal residence)
Click this link for further information about reporting the sale of a capital asset
To enter a capital gain or loss on investment land in TurboTax, log into your tax return and type "investment income (gains and losses)" in the search bar then select "jump to investment income (gains and losses)". TurboTax will guide you in entering this information (see step 6 below)
Alternatively, to enter your sale of land transaction in TurboTax Online or Desktop, please follow these steps:
Since you paid foreign taxes on the this transaction, you will be allowed an offset for these foreign taxes on your US tax return. If you take a foreign tax credit, your US tax liability will be reduced by the amount of taxes that you would have paid if the transaction took place in the US (see this link Claim Foreign Tax Credit). If you take a foreign tax deduction on Schedule A, you will be allowed to deduct the full amount of the foreign taxes paid but you will need to itemize (which could limit your ability to take the full deduction). The TurboTax software will help you determine which of these options will lower your overall tax liability.
Please note : If you have foreign bank accounts, you may be required to file a Report of Foreign Bank and Financial Accounts (FBAR) if are a US citizen or resident and:
To be directed to the US Treasury Government Website to prepare a Report of Foreign Bank and Financial Accounts, click FBAR (TurboTax does not support this form)
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