I am about to sell my ranch which I have lived on the past 30 years in South America and retire. What will my taxes be to the U S government? I am a U S citizen.
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I am about to sell my ranch which I have lived on the past 30 years in South America and retire. What will my taxes be to the U S government? I am a U S citizen.
Selling a farm involves disposing of both business and non-business property. Land, machinery, livestock, and other assets used in farming are business property, while the farm residence is non-business property. For each type of property, the tax treatment is different. Gains and losses may be either capital or ordinary depending upon the asset.
Farmers are eligible to exclude the gain on the sale of the personal residence under the following conditions:
The farmer (taxpayer) has owned and used the home as his/her personal residence for at least 2 of the last 5 years.
The farmer has not used the exclusion in the last 2 years.
The gain on the residence does not exceed $250,000 ($500,000 on a joint tax return). IRC § 121.
See also:
Publication 225 (2008), Farmer's Tax Guide
And read carefully. You may wish to engage a professional tax preparer to help you with this; it may get complicated.
Additionally, you will be entitled to a foreign tax credit on any tax you pay in your country of residence deductible against any US tax you owe.
A U.S. citizen must report worldwide income. On your home property, you may exclude gain of up to $250,000 if you meet the requirements.
Also if you paid taxes in a foreign country then you can claim foreign tax credit by filing Form 1116. Also you may be required to file Form FBAR. Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income
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