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lovely_bala
Returning Member

Establishing Cost-Basis in Foreign Real Estate


Hope I can get some advise here on my tax question.

 

I sold a foreign real estate last year 2021 which was purchased on 2005. I am trying to figure out the cost basis for the capital gain  for the US tax filing purpose and documents /evidence that I nee to have.

 

* Foreign real estate purchased and sold in India and I did not receive any 1099-B hence don't haver any cost basis recorded.

* I paid 7% of the total purchase price for the stamp duty which was paid by purchasing through physical stamp paper on which purchase document recoded.. Can I the use then the purchase document as the evidence for the duty paid and include it in the cost basic

* I paid additional 4% for the purchase document registration under the Indian Registration Act with a sub-registrar. I don't have any evidence on that transaction however the registration fee is well documented in the Indian registration web portal. Would that be accepted as the evidence if I include it in the cost basis.

* Broker fee and Attorney fee paid at the time of the purchase but have no documents pertaining to that.. Can I include them in cost basis.

* Some home improvement was done but have no documents pertaining to that.. Can I include them in cost basis

* I already filed Indian tax return and incurred Capital loss on this sale hence no tax paid in the India on the sale. I assume this has no bearing on the long term capital gain calculation for the US tax filing purpose.. correct ?? Since I did not pay any tax in India, there is no foreign tax credit possible., correct ?

* Sale proceeding is deposited on my India bank account.. I assume then I need to file FBAR and FATCA Form 8938, correct ?

3 Replies
Critter-3
Level 15

Establishing Cost-Basis in Foreign Real Estate

Simple formula ... purchase price + cost to buy + improvements + cost to sell = cost basis 

Proof of costs are only needed in the case of an audit later.

 

* I already filed Indian tax return and incurred Capital loss on this sale hence no tax paid in the India on the sale. I assume this has no bearing on the long term capital gain calculation for the US tax filing purpose.. correct ?? Since I did not pay any tax in India, there is no foreign tax credit possible., correct ?   CORRECT

 

* Sale proceeding is deposited on my India bank account.. I assume then I need to file FBAR and FATCA Form 8938, correct ?  Yes if the account qualifes to be reported. 

lovely_bala
Returning Member

Establishing Cost-Basis in Foreign Real Estate

Simple formula ... purchase price + cost to buy + improvements + cost to sell = cost basis 

Proof of costs are only needed in the case of an audit later.

 

Understand but the question is,   I don't have 1099-S  type document since it was foreign real estate sale.

should I include the  real estate broker and improvements costs in the cost basis since I don't have proof for them.. I assume if I case of audit later and if I cant produce the proof for certain items, IRS imposes heavy penalty.  Any advice is much appreciated..

Critter-3
Level 15

Establishing Cost-Basis in Foreign Real Estate

YES ... report the sale even if you don't have a 1099-S.  I cannot believe you have no record of paying certain items so it is up to you if you want to chance it 3 years from now if you are audited.  

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