Tax implications for selling foreign property as a Green Card holder - avoiding double taxation?

Thanks for the info! Do you know if there's a specific form he needs to file for this? And also, since he hasn't used the property as his main residence since 2019, does that mean he can't use the primary residence exclusion?

He'll need to report the sale on Schedule D of his tax return, and possibly Form 8949 for the capital gains calculation. If he paid any foreign taxes on the sale, he'd use Form 1116 to claim the foreign tax credit. Regarding the primary residence exclusion, the general rule is that you must have used the property as your main home for at least 2 out of the 5 years before the sale to qualify for the exclusion. Since your dad hasn't lived there since 2019, he might not qualify for this exclusion in 2025, depending on exactly when he sells. This is definitely something where a tax professional familiar with international taxation would be helpful.

How does taxr.ai actually handle different countries? I'm in a similar situation but with property in Canada, and I'm wondering if they can handle the specific tax treaty between US and Canada.

Did you still need to hire a tax accountant after using that service? Seems like international tax stuff is so complex that software alone might not be enough?

They actually have country-specific guidance for many countries including Canada. The system knows the details of different tax treaties and will highlight the relevant sections that apply to your specific situation. It was really helpful for identifying which deductions and credits I qualified for under the specific treaty with my home country. I originally planned to hire an international tax specialist, but after getting the detailed report and form instructions from taxr.ai, I felt confident enough to file myself using regular tax software. I uploaded the report they generated when I met with my regular accountant, and he said it was spot-on and saved him hours of research. For really complex situations, they can also connect you with specialists, but I didn't need that level of help.

How does this actually work? I'm confused about how a third-party service can get you through to the IRS faster than calling directly. Sounds suspicious to me.

I've tried calling the IRS dozens of times and always get disconnected. This sounds too good to be true. Did you actually get useful information once you got through? I'm skeptical that even if you reach someone they'll understand complex international tax situations.

It works by using their automated system that continuously dials and navigates the IRS phone tree until it finds an open line. When a spot opens up, they call you and connect you directly to the IRS agent. It's completely legitimate - you're still talking directly with the IRS, Claimyr just handles the frustrating part of getting through. Yes, I got incredibly useful information. The IRS actually has specialized agents who handle international tax questions - once Claimyr connected me, I explained my situation about selling foreign property and the agent transferred me to someone in their international division who gave me specific guidance about my filing requirements. They were able to tell me exactly which forms I needed and how to properly report the foreign currency conversion aspects.

Thanks for bringing that up! He'll actually be getting the money in one lump sum, but I hadn't even thought about the currency conversion aspect. Do you know if we need to use the exchange rate from when he bought the property vs. when he sells it? That's a big difference given currency fluctuations over 15+ years.

Yes, you'll need to use different exchange rates for different transactions. For the original purchase in 2008, use the exchange rate from that date to convert the purchase price to USD. For any improvements made over the years, use the exchange rates from when those expenses occurred. Then for the sale amount, use the exchange rate on the date of sale. This is exactly why international property transactions get complicated. Make sure to keep documentation of all these conversions, including your sources for the historical exchange rates. The IRS can question these calculations if they seem off.

THIS! I got hit with a penalty for not filing FBAR when I sold property overseas. The penalties are no joke - they start at $10,000 for non-willful violations. Also look into Form 8938 (FATCA reporting) which might also be required depending on how much money is involved.

Exactly. And the FBAR thresholds look at the highest balance during the year, not just the year-end balance. So if your dad sells the property and temporarily has the proceeds in a foreign account before transferring to the US, that counts toward the threshold even if the account is nearly empty by December 31st. The good news is that filing the FBAR is relatively straightforward compared to the tax forms, and it's filed electronically separate from the tax return. But as mentioned, the penalties for not filing are severe, so it's not something to overlook.

Really excellent point about the timing! I hadn't considered how the sale timing could affect his overall tax bracket for the year. If he has other income sources, spreading this across tax years or timing it strategically could make a significant difference in his total tax liability. The compliance history point is crucial too. Has your dad been filing US returns every year since getting his green card? If he missed any years or didn't report foreign bank accounts, the IRS might scrutinize this large transaction more closely. It might be worth doing a voluntary disclosure if there are any gaps before proceeding with the sale. @1acc35497938 Do you know if there are any special considerations for someone who got their green card during the pandemic years? I'm wondering if there were any temporary relief provisions that might still apply.

This is such valuable advice about the NIIT! I hadn't even heard of that 3.8% additional tax before. With a $135k property sale, if your dad has other income that pushes him over the threshold, that could be a significant extra cost to factor in. The point about 1031 exchanges not working for foreign-to-US property swaps is really important too. I was actually wondering if there might be some way to defer the taxes, but it sounds like he'll need to plan for paying the full tax liability in the year of sale. @c3c812885916 Do you happen to know if there are any other strategies for minimizing the tax impact when you can't use a 1031 exchange? Maybe something with installment sales even if he's getting a lump sum, or other timing strategies? Getting professional help definitely seems like the smart move here. The potential savings from proper planning could easily offset the consultation costs, especially with all these different rules and forms that need to coordinate properly.

This is incredibly helpful advice! The documentation point is so important - I can imagine trying to track down property records from 2008 in another country could be a nightmare if you wait too long. One question about the exit taxes you mentioned - if Country Z does withhold taxes automatically, does that typically happen at the time of sale closing, or could it be something that gets assessed later? I'm trying to help my dad understand what to expect in terms of cash flow when the sale actually happens. Also, regarding the US bank account setup - are there any specific types of accounts or banks that are better for handling large international transfers? I've heard some banks have better foreign exchange rates or lower fees for these kinds of transactions. @3df95a00d136 Did your parents end up needing to file any additional forms with the Treasury Department beyond the standard tax forms? I'm getting a bit overwhelmed by all the different reporting requirements people have mentioned!