Where to report foreign house sale income in TurboTax?

[arthur.zhao]

I paid tax to CRA (Canada Revenue Agency) when I sold my Canada house as a Canada non-resident.  When I tried to report Foreign Tax Credit from TurboTax, the software requires that the paid foreign tax should have been reported on 1099-INT?interst), 1099-DIV(dividend), 1099-OID(original issue discount), or Schedule K-1.  But it seems these forms are not fit for my paid tax to CRA. Could you please let me know which form should I report on?

[arthur.zhao]

[HelenC12]

To be eligible for the Foreign Tax Credit, you must be a U.S. citizen or resident alien or a U.S. nonresident alien who is a full-year resident of Puerto Rico.

• You must have paid, accrued, or owe taxes on foreign income that is also subject to U.S. income tax. This foreign tax must be an income tax or a tax in lieu of an income tax that is imposed on you and is a legal and actual foreign tax liability.

Both the credit and the deduction are entered in the same place. Here's what you do:

1. Make sure you've entered all your foreign income
2. From within your return, search for foreign tax credit and select the Jump to link in the search results
3. Answer Yes to Did you pay foreign taxes in 2021 or have credits to use from a prior year?
4. Follow the instructions to get the credit or deduction

In most cases, taking the credit works out better than the deduction. We'll help you decide which one's best for you when you go through this section.

• If you choose to take the credit (most people do), we'll attach Form 1116, Foreign Tax Credit if your situation requires it.

Note: You won't be able to take a credit or deduction for taxes paid (or accrued) on excluded foreign earned income or housing. This is because excluded income and housing isn't taxed in the first place.

[arthur.zhao]

>>>  To be eligible for the Foreign Tax Credit, you must be a U.S. citizen or resident alien or a U.S. nonresident alien who is a full-year resident of Puerto Rico.

Yes,  I'm eligible for the Foreign Tax Credit. Thanks.

>>>  1. Make sure you've entered all your foreign income ... ...

Actually, that's my question if it's missing from my post.  On which form or category should I report my foreign income (for this foreign house sale in 2021)?

[DianeW777]

The sale of a foreign property is considered an investment property and will be reported on Schedule D.  If the property was used as your home or other personal use, then any loss would not be deductible. If it was held for investment then a loss would be allowed.

Convert the money values to US dollars on the date of the sale.  The exchange rates can be found at the following link.

• Yearly average Currency Exchange Rates

Enter this transaction in TurboTax Online or Desktop, please follow these steps:

1. Sign into your TurboTax return
2. Next click on “Wages & Income”
3. Scroll down the screen until to come to the section “Investment Income”
4. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section)
5. The first screen will ask if you sold any investments during the current tax year (This includes any sale of real property held as an investment property so answer “yes” to this question)
6. Since you did not receive a 1099-B, answer “no” to the 1099-B question
7. Choose type of investment you sold - select Second Home (or Other if investment home)
8. Some basic information:
   1. Description –  Usually the address of the property sold
   2. Net Proceeds – Net proceeds from the sale  (Reduce gross sales price by all selling expenses including commissions, VAT, foreign sales tax, etc.)
   3. Date Sold – Date you sold the property
9. Tell us how you acquired the property - purchased
10. Any business or rental use? - if no, then select personal use only (Please note, if personal use only, you will not be able to deduct the capital loss since no capital loss is allowed for a personal use capital asset.)
11. Some Basis information
    1. Date Acquired
    2. Original cost basis
    3. Cost of improvements
12. Next you will be able to claim the Foreign Tax Credit if you paid tax on the gain to the Canada.  

    1. Where do I enter the foreign tax credit?

Please update if you need further assistance.

[Smkmi123]

What paperwork do you need to report the sale of foreign property.

[DaveF1006]

First report the sale of your property in the investment section of your return. 

1. Go to income or Wages and income
2. Go to Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto) or Investment Income
3. Go to Stocks, Cryptocurrency .......
4. Classify this as other
5. Follow all prompts that follow to determine what your capital gains are on the sale.

Now to claim your Foreign Tax Credit if you paid foreign taxes 

1. Federal>deductions and credits>deductions and credits>estimate and other taxes paid>Foreign Tax Credit>start or revisit
2. When it asks We just need to check if you have any uncommon situations indicate I paid foreign taxes on income I earned while working in another country.  
3. Navigate and record the entries that the program asks for and when you reach the page that mentions Foreign Tax Credit Worksheet, this is where you take notice between a deduction or credit.
4. The first that you will be asked is what category of income is it, you will say general category income..
5. Next screen will say Country Summary, select add a country and then select your country..
6. When it says Other Gross Income - XXXX.  Here is where you report the capital gains income that your sale was taxed on in XXX. 
7. Then you will navigate through the screens until you come to a screen that says Foreign Taxes Paid - India, here is where you record the amount paid under Foreign Taxes on Other Income. Then below that you will enter the amount of taxes paid in taxes.  This is a screenshot what this screen looks like.  After you report this , you should receive a country summary screen included in my previous post.