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jtaxuser
Level 3

Foreign Real Estate Inheritance with multiple owners

If foreign property has multiple owners with specific percentages and one of them dies,  the defunct person's portion is potentially inherited by multiple heirs with varying percentages of that piece.   If some of those are US citizens, is the specific percentage for the specific person what is used for calculations when it comes to all the forms and thresholds?  

5 Replies
tagteam
Level 15

Foreign Real Estate Inheritance with multiple owners

Forms and thresholds?

 

Can you explain what you mean by those terms with respect to federal taxation in this fact pattern?

jtaxuser
Level 3

Foreign Real Estate Inheritance with multiple owners

Sorry about not being clear as I am not familiar with the topic.  I understand there may be different forms required when it comes to foreign property.  Are those forms completed based on the filer's percentage ownership when it comes to value, sales or other numbers required to be filled?   This really would be the same for thresholds and understand why confusing in my question.  In some places I've seen mention of requirements in reporting foreign assets in certain forms if over certain amount which is why my threshold reference.

 

Thank you.

tagteam
Level 15

Foreign Real Estate Inheritance with multiple owners

I will page @pk, who knows quite a bit about issue relating to foreign property and income.

pk
Level 13
Level 13

Foreign Real Estate Inheritance with multiple owners

@jtaxuser , having read through your original post and subsequent explanations, I am still not sure  quite sure what the issue / question here is.  I state below what I understand of the scenario:

(a) An foreign asset -- realestate-- was acquired by multiple persons through inheritance. 

(b) One of the original owners passed and therefore his/her progeny  ( some of whom are US persons ) have now become owners of the original share of the decedent.

(c) so now the questions is how do the US persons report this acquisition to the US authorities

Please correct my understanding. But if my above understanding is correct then for the US person's

1. recognize the FMV of the asset ( i.e. the  portion belonging to the US person) -- FMV on the date of demise of the decedent.  This becomes the basis  of the asset or share thereof for this  US person.

2. If the  value of the asset is more than US$100,000 , the  US person is required to file a form 3520 declaring/recognizing the acquisition. This is information filing only --there is no tax consequence.

3. This being real-estate, there is no FBAR  ( FinCen form 114 ) or FATCA   ( IRS 8938 ) filings either .

Note that  if the asset is only a share in an entity, there may be other things to consider depending on the type of entity ( trust, fideocomiso, company, corporation Ltd. Gmbh , SA,  etc.. etc.) and also the country under whose laws the trust/entity is organized ( tax treaty implications).   It will get even more complicated if the entity is organized under the laws on one country but the asset is held in a different country. 

So please provide more info on the actual situation , type of asset . use , country wherein, type of entity managing the  asset etc. etc.

 

Does this answer your question or am I in the  left field .

 

pk

jtaxuser
Level 3

Foreign Real Estate Inheritance with multiple owners

Yes, pk, your understanding is correct.

Thank you.

What I haven't seen as example is partial ownership scenario which you helped explain.

There is no trust as I understand.

 

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