Reporting taxes on inherited property abroad - How to handle 1099-B for foreign apartment

This is a good situation to clarify! For inherited property, the key is establishing the correct "basis" - which is generally the fair market value on the date of death (called a "step-up in basis"). For your situation, even though you didn't receive formal ownership until 2024, the important date for tax purposes is actually when your grandmother passed away in 2021. That's typically when the basis is established. Since you sold it shortly after finally receiving ownership, you'll need to calculate any gain or loss based on that 2021 value. You're right about Form 3520 - it's generally not required for inherited property unless it came from a foreign trust or if reporting requirements for certain large gifts apply. For documenting the fair market value, you should gather whatever reasonable evidence you can from 2021 - comparable sales, property tax assessments, or even a retroactive appraisal if possible. The IRS understands that foreign documentation can be challenging. Your approach on the exchange rates sounds correct - using the rates at the time of each transaction is the proper way to handle currency conversion for tax purposes.

I had a similar situation with an inherited apartment in Portugal last year. I found this amazing tool that saved me so much headache - https://taxr.ai - it helped me figure out exactly how to report everything. The step-up basis part was confusing me too, but their system actually walked me through determining the fair market value from when my uncle died, even though I didn't get the property transferred to me until years later. They even helped me figure out all the currency conversion documentation I needed and how to properly report the loss I took when I sold. It was much better than the hours I spent trying to understand IRS publications that never seemed to address foreign inherited property clearly!

So I was really skeptical about using taxr.ai as mentioned above, but after struggling with my own inherited property from Italy, I decided to give it a try. I was surprised how well it worked for my situation. The system actually had specific modules for foreign inherited property that my regular tax software completely missed. It helped me establish documentation for the property value at time of death, guided me through the proper currency conversion process for all transactions and fees, and even generated the right forms for me to file. The best part was it clearly explained which forms I needed to file and which ones I didn't need to worry about (saved me from unnecessarily filing a 3520). If you're dealing with inherited property abroad, it's definitely worth checking out - saved me from making several mistakes I would have made trying to figure it out myself.

I had a similar foreign inheritance situation last year and spent WEEKS trying to get through to someone at the IRS who could answer my specific questions about basis calculation and currency conversion. After 12+ attempts and hours on hold, I found https://claimyr.com and used their service to get priority access to an IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c Within 24 hours I was able to speak with an IRS specialist who actually had experience with foreign inheritance reporting! She walked me through exactly how to document the fair market value from the date of death and how to properly report the sale. The peace of mind was absolutely worth it - especially since I was worried about potential penalties for incorrect reporting.

I want to apologize for calling the Claimyr service a scam. After continuing to struggle with getting through to the IRS about my foreign inheritance situation (a family property in Greece), I decided to try it out of desperation. I was genuinely shocked when I got a call back connecting me to an IRS agent within a few hours. The agent was able to provide specific guidance on how to document the basis for my inherited property when I had limited foreign records. They confirmed I was taking the right approach with the step-up basis from date of death and gave me clear direction on handling the currency conversion. For anyone dealing with complicated international inheritance tax questions, being able to actually speak with a knowledgeable IRS agent makes a huge difference. I'm glad I gave it a chance despite my initial skepticism.

Don't forget about potential foreign tax implications! When I inherited property in Italy, I had to pay inheritance taxes there before I could sell. Those foreign taxes paid might make you eligible for Foreign Tax Credits on your US return. Make sure you're tracking all the taxes you paid abroad - they might help reduce your US tax bill. Also, if you held the property for any period of time (sounds like you sold immediately, but just in case), be aware that foreign property ownership often has ongoing reporting requirements like Form 8938 if your foreign assets exceed certain thresholds.

Has anyone dealt with getting a fair market value determination for a property that's in a country where real estate records aren't as accessible as in the US? My mom left me her house in Vietnam, and I'm having a hard time establishing what it was worth when she passed.

I've been through a similar situation with inherited property in France, and one thing that really helped was documenting everything meticulously from the start. Since you mentioned the inheritance process took several years, make sure you keep records of all the legal fees, transfer taxes, and administrative costs you paid during that process - these can often be added to your basis, which could reduce any taxable gain or increase your deductible loss. Also, regarding the exchange rate fluctuations you mentioned - I learned the hard way that you need to be very consistent about which rates you use and when. For the initial basis calculation, use the exchange rate from the date of death (2021). For the sale proceeds, use the rate from when you actually received the sale proceeds in 2024. The IRS has specific guidance on this, and consistency is key if you ever get audited. One more tip: if you're claiming a loss (which sounds likely in your case), make sure you can clearly demonstrate that this was truly investment property and not personal use property. Since you inherited it and sold it immediately without using it personally, you should be fine, but it's worth documenting that timeline clearly.