How do I report foreign property to the IRS? (2024)

• TurboTax Premier Online

‎March 5, 20222:45 AM

Can you please clarify what you mean by foreign property?

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You do not have to report your foreign property on your tax return.

Foreign real estate is not a specified foreign financial asset required to be reported on Form 8938. For example, a personal residence or a rental property does not have to be reported. Ref:IRS Foreign Financial Assets

However, if you are renting the foreign propertyyou must report foreign rental activity on your U.S. tax returnjust like you would report any owned U.S. property.

To enter your rental:

1. Open or continue your return, if you haven’t already
2. Locate theSearchbar in the upper right of your screen. Search forrentalsand select theJump tolink at the top of the search results
3. AnswerYesto the questionDid you have any income from rentals or royalties?
4. On the next screen,What are you here to report?, selectRentalsandContinue
5. Follow the screen prompts to enter your rental information.

This TurboTax linkWhere do I enter income and expenses from a rental property?has information you may find useful.

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@timkug, agreeing with my colleague@Critter-3, just wanted to add that

(a) you need to keep record of your Acquistion cost

(b) depreciation in case you are renting out and reporting on Schedule-E

( c) cost of any improvements.

You will pay taxes on the gain when you dispose off the property.

Note all reportable figures in US$ at the time of transaction.

Does this help ?

You don't need to report it to the U.S. at all. When you sell it, you don't need to report the gains to the U.S. if they were under $100k.

Here is some more info for you:

FBAR (Foreign Bank Account Report)
If you have over $10,000 in foreign financial accounts at any time during the year, you must file an FBAR. While there’s no tax liability involved, there are steep penalties for not filing.
Filing an FBAR means filing FinCEN Form 114 online:
https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

FATCA (Foreign Account Tax Compliance Act) Form 8938
Expats with a total value of foreign assets (excluding real estate) exceeding $400,000 also have to report them on IRS Form 8938 with your tax return.
https://www.goldinglawyers.com/form-8938-real-estate-irs-basics-of-foreign-real-estate-reporting/
https://www.irs.gov/businesses/corporations/fatca-information-for-individuals

When selling foreign property, only need to tell the IRS if capital gains are over $100k. If they are, fill out Form 3520. If the foreign property was your personal residence, you may be eligible for exclusion of your gain on your US tax return if you meet the 2 years out of 5 test for residing in the home.

@someone191, I generally agree with all that@timkug has said except for the last paragraph ----- you will be taxed on all gain when you dispose off the inherited real estate. The $100,000 reporting on form 3520 is for receiving gifts and/or inheritances/bequeathals equal /or greater than 100,000. It has nothing to do with proceeds of sale of inherited real estate.

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pk

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@JAS1705, having read through your post / references and my colleague@SusanY1's response ( which I agree with ), I want to be sure that we are talking here about:

(a) ownership of immovable property in Mexico by non-citizens through the Fideicommiso instrumentality is outside the FATCA regs ( form 8938 )

(b) And that requirements for form 3520 in recognizing gifts/inheritance of Mexican immovable property from a US person ( a signatory of a Fideicommiso ) does not come into effect ( foreign property/asset from a US person to another US person).

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