# Sold apt overseas, need help reporting capital gains.



## P123 (Dec 2, 2015)

Hi all!

I am a double citizen (U.S. & Austria) and have lived in Austria for the past 7 years. Last July I sold my apartment in Vienna. I lived in the apartment for 5 years. I have read online that if I lived in the apartment for at least 2 of the last 5 years I am not required to pay capital gains on the profit.

Does anyone have experience with this? I don't meet the income tax filing threshold for 2015 so I would not necessarily file an income tax return...however, I do need to file an FBAR and 8938 and I don't want the IRS/treasury to be wondering where the sudden extra funds came from.

So basically, if I don't have to file a 1040 do I need to report the capital gains?? I assume the forms for that would be attached to a 1040?

Thanks for any and all tips


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## Bevdeforges (Nov 16, 2007)

You don't have to pay US taxes on the first $250,000 of gain on the sale of your personal residence ($500,000 if you're married, filing a joint return and the home belonged to you both). And no, you don't need to file a 1040 only to report the gain if it all falls below the amount you can exclude.
Cheers,
Bev


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## P123 (Dec 2, 2015)

Thank you Bev for your reply. As with all these types of things I do try my best to inform myself before posting here ;-)

I read the $250,000 exclusion online (and yes my profit was well below that), however, it is always tricky knowing whether owing no tax = not needing to file/report.

Yes, I don't technically need to file a 1040 due to being below the filing threshold but are you certain that if I don't need to pay capital gains tax it also equals no filing requirement?

Thanks for your patience! ;-)


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## Bevdeforges (Nov 16, 2007)

All I can say is that I was told that by an attorney in the US when my parents sold their house (and had not been filing for several years due to income below the filing threshold). My Dad even had a letter from the IRS asking him NOT to file unless his circumstances changed. So, yeah, I'm pretty sure of this one. (And I can confirm that we never heard a word about this from the IRS - even with my parents living in the US and being subject to much closer scrutiny in such matters.)
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

No, that's incorrect Bev. Your attorney was wrong -- or at least would be wrong in 2015, which is where I'm looking for guidance (that tax year's IRS forms and instructions). Let's take a look at IRS Publication 501 together. On page 2 of the 2015 edition there is Table 1 which lists the most common filing thresholds. The final column in that table is entitled "THEN file a return if your gross income was at least...**" The ** refers to a footnote appearing in that same table on that same page. Here's the footnote:

"** Gross income means all income you receive in the form of money, goods, property, and services that isn't exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it)...."

So there you go. The gain from the sale of a primary residence does count toward gross income for purposes of comparing your income against the filing threshold for your filing status, even if some or all of that gain from the sale of your home is excludable. There's nothing ambiguous about that instruction -- it's quite clear.

IRS Publication 523 ("Selling Your Home") contains nothing that would contradict IRS Publication 501 on this score at least. I checked there, too.


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## Bevdeforges (Nov 16, 2007)

OTOH, there is little to no likelihood of the IRS pursuing anyone who fails to file on the sale of a personal residence overseas if the gain amount is safely below the excludable amount and the person has not been filing prior to that, due to income below the filing threshold. 

Keep rooting for ongoing budget cuts for the IRS.
Cheers,
Bev


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## P123 (Dec 2, 2015)

Dear BBC Watcher, I appreciate your attention to detail. I do not meet the filing threshold from income (barring the profit on the sale of my apt). Do I still need to file, and if so, what exactly? A 1040 and include the sale of my apt as income? Any other forms?

Thanks


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## BBCWatcher (Dec 28, 2012)

According to those instructions I just cited, right from the IRS, if you meet the threshold (you do), you file a full tax return per normal, including Form 1040 and whatever attachments apply. You'll probably have a lot of zeroes and blanks, but most people do. I recommend using tax preparation software, even the free software, to assist.

Presumably you'll also have a FinCEN Form 114 filing requirement.

Not so much detail, by the way. This one is easy. The IRS tells you the answer in the filing threshold table, exactly where you'd expect them to tell you. It took me about 30 seconds to find this answer, so don't give me too much credit. 

Bev, actually there's a method here. Getting the primary residence's gains documented from a tax point of view, even if they're not taxed, is often important to answer future tax questions (and in ways favorable to the taxpayer).


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