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I have a question concerning a foreign money transfer.
My wife owned land in her then home country prior to our marriage in 2005. She came to the USA in 2004 and we married in 2005. She became a US citizen in 2009. I am a born US citizen. Since she and we have no plans in ever living in Turkey ane we want our son to be raised and educated here, she wants to sell the land to buy help purchase a house here and build a college fund for our son. The land in US dollars is worth about $ 300,000.00. Remember, she had the land before our marriage and while she lived in her home country. She still retains duel citizenship there. I have had no personal money invested in her land or that country. Onyy her maiden name in on the land title. I have no claim or connection to the land.
If she sells the land and transfers the money here, is it taxable in the US and/or by the state of rsidency? If it is, how should we transfer the money in a way that would reduce her taxes? She is not employed. I am retired. We have previously filed our taxes as a married couple. Thank you. She has a buyer. We need to know any pitfalls ahead as to what is our best course of action involving the receiving and use of the money. |
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She will need to report the gain form selling the land no matter if you transfer the money to the US or not.
See here: http://www.irs.gov/publications/p17/ch14.html When you transfer the money you might have to file form 3520 http://www.irs.gov/pub/irs-pdf/f3520.pdf |
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Because she has dual-citizenship, it is likely that Turkey will tax the sale of the land, and it is likely that the tax will be collected when the title transfer occurs. That being the case, she should file Form 1116 to claim the Foreign Tax Credit.
Since land is a capital asset, the profit made on the sale is a long-term capital gain, which likely will be taxed at either 5% or 15%. If there are Turkish taxes on the transaction, it is probable that those taxes will completely offset any tax owed on her U.S. tax return. If you need professional help filing the return, email me at [email protected]. |
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