Yes if you are a US citizen or resident alien you must declare your worldwide income on your US tax return, no matter where earned or received. If you have a gain on the sale, you may utilize foreign tax credit to help offset any double taxation.
You will need to use the spot rate for the date of purchase of your foreign home and the spot rate for the date of sale of your foreign home. The difference between the converted USD amounts using the correct rates on the dates for purchase and sale is the amount of gain or loss on your home residence. So in foreign currency, it could show a gain, but once translated to US dollars, it may show a loss. There is a currency converter on https://www.oanda.com/
Please note if this is your principal residence that was sold, there are exclusions from the gain on the sale if you meet the requirements. Please see here if it was a second home that you sold. Here's that info.
You won’t pay taxes on the first $250,000 (also known as a gain) you make from the sale of your home. If you file jointly, you won’t pay taxes on the first $500,000.
That income is free and clear as long as:
- You owned the home
- It was your main home for two years or more within the five years leading up to the sale
- You waited at least two years between selling your primary home and excluding your first $250,000 or $500,000 from taxes. In other words, you may buy and sell as many primary homes as you'd like, but you'll only get this tax benefit every two years.
When you sell a second home, the tax situation is different. Here's that info.
TurboTax will show you if your home sale is taxable.
Open (continue) your return in TurboTax. If you’re not sure you’re in your return, select the Take me to my return button.
- In the upper right corner, search for home sale and then select the "Jump to" link in the search results.
- Answer Yes to "Did you sell or have your home foreclosed in 2017?"
- Follow the screens to enter your info.
