Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 06-07-2016, 04:08 PM
Junior Member
 
Join Date: Jun 2016
Posts: 1
Smile Capital Gains On Inherited Property Outside Usa

Hi,

My name is Mohit and i am resident in usa.

I got a house property property (In India) in inheritance from my grandmother (after her death) in 2016. said property was acquired by her in 1980 and she lived in that house though out this time.

I want to sell that property and have couple of questions.
1. What is the capital gain in my hand when i received property in inheritance?
2. What will be the basis for me when i sell this property.
3. How capital gain will be computed when i sell this Property.

Thanks
Mohit



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 06-07-2016, 05:18 PM
Moderator
 
Join Date: Oct 2010
Posts: 4,772
1. What is the capital gain in my hand when i received property in inheritance?===== it is an inheritance, and it is a capital gain transaction when you sell the property

IRS Form 3520 Part IV on Page 6 is used to report foreign inheritances/bequests in excess of $100k. In computing the $100k threshold, you would consider your grand parents as one because they are married. For example, if your grand mother left you $60K in cash and property and your grand dad also left you $60K, the inheritance would be reportable. While the inheritance is reportable on Form 3520, it is not considered income and you do not have to pay U.S. income taxes on the value of the property in most circumstances. An exception would be if your grandparents left you some form of income such as a rental property.
You may also have to disclose your foreign estate interest on Form 8938 or at least file that form and refer to your Form 3520 filing. If you received cash or securities in a foreign financial account in excess of $10k at any time during the year, you may also need to file an FBAR. The penalties are steep for not complying with the disclosure requirements..
Lastly, the sale of the property would be reported on Sch D of your Form 1040. The rules of inheritance that apply to domestic inheritances apply similarly to foreign inheritances. Specifically, your basis in the assets that you inherit is stepped up to the date of death value. In other words, you would use the fair market value at the date of death of your GM as your cost of the property that you sold, and that should be reported on Sch D and form 8949. However, in US,It depends; for you will never have to worry about inheritance taxes because only six states currently collect them Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. Even in these states , mostly unless your amount is less than $1 M, then you do not need to pay inheritance taxes.


2. What will be the basis for me when i sell this property.===.As said, your basis in the assets that you inherit is stepped up to the date of death value. In other words, you would use the fair market value at the date of death of your GM,NOT her original basis remember this !!!!!!
3. How capital gain will be computed when i sell this Property. ====> Once you pay taxes on the inherited pty to Indian taxing authority then you may claim the taxes paid to india on your US return as foreign tax credit on your federal ? state returns. capital gains are the difference between the purchase price of your real estate and the price you sell it for. Capital gains tax is what you pay on that difference, after adjusting for a variety of exemptions, deductions and tax breaks. The tax on capital gains income is calculated separately from the tax on your regular income and often at a different rate



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Capital Gains on Inherited Property Kev28 Capital Gains 0 11-15-2014 03:54 PM
Inherited Jewelry - How to Calculate Capital Gains aherron Capital Gains 2 03-06-2012 07:32 AM
capital gains on a rental property conkey Capital Gains 1 02-07-2012 03:47 AM
US capital gains tax on sale of foreign inherited property jkoshi Capital Gains 6 01-24-2012 04:51 AM
Capital gain on inherited property gbayes Capital Gains 1 04-11-2010 10:20 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning