Migrated to US & sold property abroad - how to file?

[Knotty1942]

My wife and I, both retired migrated to the US to live with our daughter in 2015. We became US citizens in 2021.

In 2022 we sold our house, which is abroad in Africa. We purchased the house in 1983 and lived in it until 2009, at which point it was rented until the point of sale in 2022.

My wife and I file joint tax returns.

Please can someone advise me how to make the correct disclosures / filings on my 2022 tax return.

Thanks!

[MaryK4]

If you are resident aliens, you must report your worldwide income, but you will be able to claim the foreign tax credit if you paid on the income in another country.

[Knotty1942]

 Thanks for the reply. We are not resident aliens. We are now citizen residents of the US. The house qualified as our principal primary residence in the country it was sold, therefore we did not pay any tax on the sale.

[AmyC]

In the U.S., it was a rental home instead of a main home so it is taxable as an investment property.

• If you have been reporting it on sch E, you will need to mark the asset as sold. For a personal residence converted to a rental and later sold, please see another post of mine here for pictures and steps.
• If you have not been claiming it as a rental - disqualified, like a family member lived there or below value rent charged - see Where do I enter the sale of a second home, an inherited home, or land on my 2022 taxes?

[guywong]

U.S. persons are required to report their worldwide income on their U.S. (and state) income tax returns.   All income is taxable unless the Internal Revenue Code specifically excludes them.

Selling rental properties overseas is not any different from selling domestic rental properties, you report the sale on Part III of Form 4797, see https://www.irs.gov/pub/irs-pdf/i4797.pdf.  The fact that it was your primary residence until 2009 is not relevant as you did not live in it at anytime within the last 5 years.  IRS assumes depreciation has been deducted on the property whether or not you actually took depreciation on your previous years tax returns, their phrase is "allowed or allowable".  But you may take a catch-up depreciation this year if you didn't.

Any income tax you paid in Africa on the sale of this property may be used to offset your federal tax liabilities, but not state taxes, on Form 1116.

Unrelated to your question, if you have an overseas bank account with balance exceeding $10,000 at anytime during the year, you will have to file a Foreign Bank Account Report (FBAR), Form 114, with FinCEN of the U.S. Treasury.   Form 114 must be filed electronically.  You may also have to file a Form 8938 with your 1040 tax return.

I suggest you seek professional help to complete your tax returns this year.