Filing tax for sale of overseas home acquired before immigrating to the USA

ngvuus

Hello everyone,

I acquired a house in 2009 in Vietnam and immigrated to the USA for the first time in 2015. Now in 2024, I want to sell that house and transfer the money to the USA. I have a couple of questions that I need help with:
1. Do I need to pay US taxes for that sale (the Vietnam tax for that sale is 2% of the transaction value)?

2. If I do need to pay US taxes, which taxes must I pay and how do I file them?

Thank you so much.

KristineS

Hi ngvuus,

If you're a U.S. Resident or National (green card holder), your worldwide income is subject to U.S. income tax the same way as a U.S. citizen. That means filing Form 1040, U.S. Individual Income Tax Return.

How the sale of the home is reported and what type of tax is due, if any, may depend.

For instance, if the house was used and sold as a rental property, that's reported on Schedule E, and there may be capital gains tax to pay, and possibly some income tax if depreciation is involved.

Or it the home was a vacation or second home for you, that would be considered an investment or capital asset which may or may not have capital gains when sold depending on the original cost/basis and the sales price.

You may be eligible to claim foreign taxes paid as well. Foreign income taxes paid can be taken as a credit on Form 1116 or as an Itemized Deduction on Schedule A. The Foreign Tax Credit is generally the better option since a credit will usually reduce your tax liability dollar for dollar. FreeTaxUSA only supports this tax if reported on a K-1, Form 1099-INT or Form 1099-DIV.