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Sale of property (land only) in the Philippines by a US citizen. Tax implications?
Hi,
My retired mother is selling her real estate property (land only) in the Philippines. She needs the money to support herself. As a US citizen, does she have to pay income or capital gains tax in the US? How can she bring the proceeds from the sale to the US? If she needs to pay US tax, what is the best way to handle this so she pays the least? Advise. Thank you! |
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A U.S. citizen or resident must report worldwide income. So you will report this sale on schedule D (Form 1040). If you paid taxes in the foreign country, you will claim credit for taxes paid in the foreign country by filing Form 1116. Read: Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income |
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The very most your Mother will pay will be 15% tax on the gain (assuming she held this land for more than 1 year). It appears the tax rate in the Phiippines is 6% See:Bureau of Internal Revenue Website She can claim this as a foreign tax credit as described above by MukatA. |
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