I am a US Citizen and US resident, but I own real estate in Italy. I wish to sell it, and in Italy there are no capital gains taxes on real estate. My question is, must I pay capital gains on this property here in the States?

Thanks!
Sal

Sal:

Yes, you do have to pay capital gains taxes on property sold in Italy.

The United States is unique in the world in that it taxes ALL sources of income of its citizens regardless of where the income originated. It does provide for a dollar-for-dollar credit for foreign taxes paid to avoid paying taxes twice, but that is not an issue here.