Sale of Foreign Property
Hello,
Thank you for taking my question.
I sold a property in India around April 2024. After appropriate taxes were withheld, I deposited the sale proceeds into my bank account in India. I recently wire transferred the sale proceeds to my US bank account. All relevant documentation is available - sale deed, deposit slips, overseas transfer request form etc.
Based on my understanding, when I file taxes next year:
1. I must report this sale on my 2024 tax return (I file as "Married filing jointly")
2. File FBAR as the bank account in India had excess of $10,000 due to this sale.
3. File form 8938 (though it may not applicable in my case as the Indian bank account did not meet either $100,000 or $150,000 threshold)
Now my questions are:
1. In addition to the three filing requirements mentioned earlier, are there anything else I need to report/file?
2. Do I need to report anything to the IRS/Treasury about the recent international wire transfer (i.e. any reporting to be done this year)? If so, what forms do I need to file? Is it true that the FBAR that will be filed next year will suffice?
3. Are there any reading materials online that explain what needs to be considered when money received from foreign inheritance, property sale, sale of investments etc are transferred to the US and its reporting requirements?
Thank you for your assistance.
Comments
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Hi SKV,
Thanks for joining our FreeTaxUSA Community and writing in with your question.
Based on your information, yes, you'll include the sale of the property in India on your 2024 tax return next year.
The FBAR filing will be reported on the FinCEN website.
You may or may not need to file Form 8938, Statement of Specified Foreign Assets, as you note. Our software supports this form.
For questions 1 and 2, since FreeTaxUSA support is for the preparation and filing of personal income tax returns, without knowing all the facts and circumstances of your financial situation is for 2024, we can't say if filing these forms is complete or not. As far as additional reporting requirements to the IRS or Treasury, in general, bank transactions over $10,000 are reported. Beyond that, we invite our Community members to offer their knowledge on this subject. You will need to check the FinCEN website provided above to understand your full reporting requirements for FBAR filings.
Here are three suggestions to help you with question 3.
Form 3520 reports transactions for foreign gifts.
Publication 544 covers sales and dispositions of assets, including foreign assets. A word search on the word 'foreign' in the PDF version of the publication might help you narrow down information faster.
Similar for Publication 550 for investment income and expenses using a word search in the PDF for 'foreign.'
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Thank you Kristine. The links you provided are really good reference materials.
With further explain questions 1 and 2, I never had any overseas bank account prior to year 2024. The bank account opened this year (in India) was primarily to deposit the proceeds of the sale, pay applicable Capital Gains tax (in India) and move the remaining funds to the US. Hence my question if any filing needs to be done this year. As mentioned earlier, I presume when I file my 2024 taxes, the FBAR needs to be filed for the bank account opened in 2024.
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Hi again SKV.
Glad those resources were helpful.
Your 2024 transactions will be reported on your 2024 tax return next year in calendar year 2025, as applicable. As to other non-tax return related questions, I can't speak to other requirements you may have as that is outside the scope of tax preparation and filing of tax returns. You may want to invest an hour of time with a paid tax professional for additional answers to your questions.
