My mom (at the time of transfer was not a US permanent resident, she is now) gifted me her foreign real estate valued above $100k in 2023. Essentially, I filed 3520 on 2024 to report the gift.
I'm planning to sell the estate near the end of 2025, I will transfer that money (above $100k) to my foreign bank account then transfer that amount to US bank account. What forms do I need to file? I did some research so correct me if I am wrong.
1. I need to file 8938 and Fincen114, correct?
2. Do I need to pay capital gain tax when I sell the house? If I do, which form do I report it on?
(a) your basis in the property ( for purposes of computing gain/loss at disposition ) is the same as that of the donor -- your mother. Thus if bought it for US$80K and made improvements of US$10K, then her basis in the property was US$90K at the time of donation --- not the FMV you quoted. However , FMV is also used in special circumstances -- related party, gain/loss computation. Note that if the donor had acquired the property as inherited, then FMV at the time of passing of the decedent would be used as the basis.
(b) For sale of asset you treat this as a sale in the US -- forms 8949 / Schedule-D etc.. All items are in US dollars using exchange rates publicly available and on the day of the transaction.
(c) Since you have / will have a Foreign bank account , you come under FBAR ( www.FinCen.gov, form 114 ) and FATCA ( form 8938 along with your return for the year ) with the required thresholds.
(d) if the foreign country where the property is located taxes you on the gain un der its tax laws, that Foreign Tax may be eligible for Foreign Tax Credit / deduction treatment. Please which country -- because of tax treaty considerations.
Does this help ?
Is there more I can do for you ?
(a) So when my mom gifted me the house, the basis I have to use was when she purchased the house or the basis at the FMV when she gifted me? What do I do if she does not know or forgot the price purchased (she might have lost that documents when she come to the US as that document was very old, the property was purchased by my mom 20 years ago). Do I provide a statement and an estimate of the basis based on my mom's memory? The foreign country is located in Vietnam, and we do not receive any form such as 1099 as stated in the 8949 instruction
Also, when I filed 3520 last year, we did include an estimate of the current value of the house when my mom gifted me. Can I use that as my basis ?