Sale of foreign property

[anton]

In 2024 I signed a pre-sale agreement with a buyer for a property that I owned abroad. The buyer paid a small amount of earnest money in 2024. The buyer wired this money directly to me, it was not deposited in an escrow account.

Then, in 2025, the sales contract was signed and the buyer paid the rest of the amount and took ownership of the property.

I am trying to understand how to declare the earnest money that I received in 2024. This resembles an installment sales scenario but technically the property was sold in 2025. So I am not sure how to enter this in TurboTax. I would really appreciate any guidance.

[DianeW777 · Accepted solution]

It depends. The final sale date is 2025, however you were under contract in 2024, and accepted payment in 2024. The sale date for tax purposes is actually 2024. It's up to you if you want to report it on the installment method.  An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. 

• How do I report an installment sale in TurboTax?
• What is an installment sale? (for income tax purposes)

You do have the option of reporting the full sale in 2024 even though some of the money was received in 2025.

[anton]

Thank you for your answer! I have one follow up question: as part of the sale I paid a tax to the foreign country. Where do I report this tax in TurboTax?

[DianeW777]

Report the foreign tax using the link below to receive credit for taxes paid to another country on the same income.

• Where do I enter the foreign tax credit?

[anton]

Thank you!

[anton]

If I report the full sale in 2024 can I also claim the foreign tax credit in 2024? I paid foreign taxes for the sale in 2025 when the sale completed. TurboTax does not allow me to select a 2025 date for the foreign tax, it will only allow 12/31/2024.

[AmyC]

You can only claim credit for what you paid in 2024. The rest would be in 2025. See: 

• About Form 1116, Foreign Tax Credit 
• Foreign Tax Credit | Internal Revenue Service