reporting sale of foreign property (second home) in Turbo Tax Online

[DaveF1006]

To look at this in detail to see what is happening, we would like to see a diagnostic copy of your return. The information in this file is a sanitized copy meaning there is no personal information, only numbers so that we can troubleshoot in depth, check for calculation issues, and to see how certain items are applied. Here is how to order. 

For Turbo Tax online, go to tax tools>tools>share my file with agent.  When this is selected, you will receive a token number.  Respond back in this thread and tell us what that token number is. 

If you use the desktop version, go to the black stripe at the top of the program>online>send tax file to agent. Once you receive the token number, reply back in this thread and let us know what that token number is.

@rsubram 

[brij23]

@Laura_CPA I have a similar situation. I sold a property in India in Jan 2024. I started renting it from 2015. I have lived in US since 2015.

1. Cost basis - I added the depreciation cost till date from my last year's 1040 that I took on this property as it was a rental property. is this correct? Can I add depreciation cost to the cost of purchase?

2. Should I call this a "second home" or "other". I have a loss that I can declare on this property. If I declare this as a second home, I cannot take a loss. 

3. when I filed for taxes in India, I was able to show net loss. So even though tax was collected at the time of the sale, I was able to claim it back as a tax refund later in the year. so I paid 0 tax in India. Should I bother filling foreign tax credit? Does it even apply to me?

Please advice.

[DaveF1006]

Yes, here are the answers to your questions.

1. No. You do not add depreciation to your basis. Hopefully, you have claimed depreciation expense each year you owned the property because the depreciation will be recaptured and taxed as ordinary income.
2. This is not classified as a second home thus it would be classified as other. By classifying it as a second home would infer it was a personal residence, which, in this case, is not.
3. Since you received a tax refund, you wouldn't be eligible claim a Foreign Tax credit.

@brij23