# We never planned for house sale CG taxes in US and have no receipts. Now what?



## mchjlh (Jun 6, 2013)

We are getting to the age when staying in our house until death is not a certainty. But, apparently, US capital gains tax on the sale of a house is indeed a certainty. 

Here in Canada we bought a lot and built almost 40 years ago. I've been informing myself about the capital gains taxes that the IRS levies on the sale of a principal residence. I see that the gain can be reduced by providing receipts for all sorts of costs, from the purchase of the lot to improvements done over the years. 

Our gain may or may not be in excess of the current US$500,000 exclusion for joint owners. We do not plan to sell right now. The market may change, the exchange rate may change, and our future health is unpredictable, etc. But, I want to prepare in case we do sell, and owe tax.

My question is: What would we do when filing, after a sale, given that we have kept no receipts for these 40 years related to the lot purchase, the invoices from the contractor, other materials for work I did myself, everything...? The house was paid for many years ago and I think we literally burned the last mortgage documents, though even those would not have told the full story.

My internet searches have yielded nothing thus far, so I thought I'd post the question here. Thanks.


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## Bevdeforges (Nov 16, 2007)

I don't mean this to be flip, but in your situation, it may just be a matter of "assuming" that your gain on the property when and if you sell it "must be" under the $500,000 mark and let it go at that. Actually, if the gain is under the threshold, there is no paperwork to file - not with your tax return, nor any other way.

That's how we handled the sale when my parents sold their house on moving into an assisted living place, and the issue never came up. 

IRS Publication 523 gives all the details, but pay special attention to the section headed *Reporting Gain or Loss on Your Home Sale*. The very first paragraph in that section indicates that, unless you meet certain specific conditions (namely that you actually have a taxable gain or portion of the gain is taxable) you do not need to report anything.


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## Nononymous (Jul 12, 2011)

What Bev said. When you sell the house, "assume" that the capital gain falls below $500k, do not report the sale, and the IRS is none the wiser.


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## mchjlh (Jun 6, 2013)

Nononymous said:


> What Bev said. When you sell the house, "assume" that the capital gain falls below $500k, do not report the sale, and the IRS is none the wiser.


Thanks to you both for your replies. My follow-up question is: If we sold the house for, say Cdn$800,000 (today that's about US$590,000) and that amount appeared for the first time in savings accounts on our FBAR, and a year later we reported significantly larger interest amounts on Schedule B of the tax return, would those items not trigger questions, or an audit of our tax returns?


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## Bevdeforges (Nov 16, 2007)

mchjlh said:


> Thanks to you both for your replies. My follow-up question is: If we sold the house for, say Cdn$800,000 (today that's about US$590,000) and that amount appeared for the first time in savings accounts on our FBAR, and a year later we reported significantly larger interest amounts on Schedule B of the tax return, would those items not trigger questions, or an audit of our tax returns?


Not normally - and actually, FBAR reporting really doesn't seem to generate any particular "interest" on the part of the IRS. Even if they noticed it (which they won't), all it says is that you didn't have a mortgage on the property - which is fine and dandy. Your gain on the transaction could still have been paltry - or you could even have had a loss on the sale.


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## Nononymous (Jul 12, 2011)

Or this: open a new account at a bank you've not done business with before, do not identify yourself as US persons so it is not reported under FATCA, do not report it on FBAR, and put the money from the sale in this account. The IRS will be none the wiser.

That being said, they probably wouldn't notice or care if it was in a reported account.


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## underation (Oct 25, 2018)

Nononymous said:


> Or this: open a new account at a bank you've not done business with before, do not identify yourself as US persons so it is not reported under FATCA, do not report it on FBAR, and put the money from the sale in this account. The IRS will be none the wiser.
> 
> That being said, they probably wouldn't notice or care if it was in a reported account.


If I understand corectly, there's nothing for the IRS to be wiser about, given that neither the OP nor the IRS has any way of discovering whether the gain on the sale is or is not reportable.


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