All Sale of Land Taxable, Even If It's Not in U.S.

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Q. I am a retired U.S. citizen, age 63, receiving a pension and Social Security disability benefits. I own property in the Dominican Republic. I sold one lot last year for $700,000. The money is still in the bank in the Dominican Republic. I also have another property on the market for $10 million. Do I have to report the property sale on my tax forms, even though it's in another country?

Gain on the sale of land, wherever it's located, is taxable income. Compute the gain as the proceeds on the sale of the land, minus the original cost of the land and the cost of any improvements made to it. This is a capital gain (or loss), which is reported on Line 13 of Form 1040, using Schedule D, as well as Form 4797 if the property was business property. If you pay taxes in the Dominican Republic on this sale, you can file Form 1116 to claim a foreign tax credit on line 47 of Form 1040.

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All Sale of Land Taxable, Even If It's Not in U.S.

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