# Do I have to pay US Tax?



## Mitschiboy (2 mo ago)

Hi
I hold Dual Citizenship in Austria and USA. I live in Austria and inherited property from my mother which I would like to sell. I know that I have to pay sales tax in Austria but would like to know if I have to pay tax also in the US?
I appreciate any help


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## Harry Moles (11 mo ago)

Do you currently file US tax returns, or have any "exposure" to the IRS - US assets or income sources. If you are only a citizen with no other ties to the US, you are far better off not filing anything, and not making yourself known to the IRS.

In any case, you would not owe any sort of transaction or sales tax after the sale of your mother's house. There is no US estate tax for beneficiaries. (The only possibility of a tax bill would be if you held the property as an investment and it appreciated, but then you'd presumably pay capital gains to Austria first and that would offset anything owed to the US.)


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## Mitschiboy (2 mo ago)

Thank you very much for your answer.
Yes, I file US Tax returns every year, the last years I filed 0 since I have no income here or in the US. I live off my savings after selling my company in the US. I lived there for 31 years and returned to Austria in 2015. I also file for FATCA every year telling them about my bank account in Austria.
I have to pay real estate income tax in Austria and I am lucky it is very low since my mother purchased this property in 1970. It is not a house but a property where you can build on. If I sell it how would I report the money to FATCA? Will there be a red flag when all of a sudden there is a big amount of money on my bank account? How would I explain that?
Would you know?
Thanks again for your help.


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## Mitschiboy (2 mo ago)

I just saw you are German? If you like we can use this language


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## Harry Moles (11 mo ago)

I'm not German, but I speak it and was using my VPN to watch Eurosport! That changes the flag here.

If you sold the property and put a large sum of money in your bank account, you'd need to report that high balance on your yearly FBAR. Otherwise you do nothing. You are not required to explain to anyone why the money is there. The IRS does not have the resources to look at FATCA data (which in any case is only year-end balance so if the money was moved in and out before Sylvester it would not appear on the FATCA report) so that is not a concern.

Filing US tax returns may get complicated if you decide to invest this money in Austria. That is where the reporting and tax burdens become unpleasant. If you still have assets in the US then it's wise to play by the rules, but if your money is in Austria, you have citizenship and were born there, you can very easily ignore FATCA (by not disclosing US citizenship to financial institutions) and ignore US tax filing requirements.


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## Mitschiboy (2 mo ago)

Does buying a house to live in and living off the money count as an investment?
I also have a daughter born and living in the US. I intend to buy a house for her to live in as well. Would that be a problem with taxes. 
I think I understand that if I invest in stocks for example I would have to pay capital gain tax when selling. Since I have to pay capital gain tax in Austria it would be interesting to know if I get double taxed in the US when reporting the gain as income on my US tax return.
Again thanks so much for your help. Can you recommend a website where I could get more info about this?
Enjoy your Sunday


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## Harry Moles (11 mo ago)

There are vast resources out there for people in your situation who feel as though they need to file. Start with IRS Publication 54. (Since I'm a former dual citizen who wisely chose to ignore those filing requirements, my expertise is limited to telling people when it's safe to ignore the IRS.)


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## Moulard (Feb 3, 2017)

The sale of a home is only partially exempt from capital gains tax in the US (first $250k USD of the gain if I recall correctly) and if you are specifically asking about this part of it... then Pub 523 is also a good place to start



https://www.irs.gov/pub/irs-pdf/p523.pdf



But as Harry has said, because it is real property located in Austria, Austria would have the first right to tax any gain. But you would be able to claim any Austrian tax paid on the sale against any US tax liability. I am not familiar with the US-Austria tax treaty, but if the reduction of double taxation clauses are like most treaties, you end up paying the higher of the two tax rates.


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