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Old 04-14-2015, 02:11 PM
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Selling foreign house

Hi,
I am planning to sell a house in my home country. I bought the house many years back before coming to the US.

I know I need to pay taxes on the "gain" (if any), but it is not clear to me what documents should I produce (with an official translation?) and what form to eventually fill.

Should I report even if I sell it with a loss?

Thanks.



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Old 04-14-2015, 08:18 PM
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Join Date: Oct 2010
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I know I need to pay taxes on the "gain" (if any),====>however you can claim foreign capital gain taxes you pay to your home country on your US fed return but I guess you can not fully claim foreign taxes on your home state return. check it with your state.


but it is not clear to me what documents should I produce (with an official translation?) and what form to eventually fill.= ====>>






Should I report even if I sell it with a loss?=====>>>no; Sorry I do not think so UNLESS it was an investment/rental/biz use pty. You can only deduct losses on the sale of property used for business or investment purposes. a loss on the sale of a personal residence is considered a nondeductible personal expense even if it is your primary home secondary home. The only way you can obtain a deduction if you sell your home at a loss is to convert it to a rental property before you sell it. However, your deductible loss will be limited. This is because when you convert property you held for personal use to rental use your tax basis is the lesser of the :
the property’s fair market value, or the property's tax basis on the date of the conversion. If you do incur a loss on an investment property, it's deductible as a capital loss. Capital losses can be only used to offset capital gains. If you don't have capital gains, or have more losses than gains, you can deduct an extra $3k a year. Any excess loss is carried forward to future years until you use it up.
At the same time, with few exceptions taxpayers also don't have to pay taxes on the gains from the sale of their personal homes. as long as you have owned the home overseas and lived in the home for a minimum of two years. Those two years do not need to be consecutive. In the 5 years prior to the sale of the house, you need to have lived in the house for at least 24 months in that 5-year period. In other words, the home must have been your principal residence.



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