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Sale of property in Europe

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  • Sale of property in Europe

    (original question)

    I sold some property (for a bit over $200,000) in 2004 in Spain that I had
    inherited from my mother a few years ago. Since I was not a resident (I am a
    US citizen living in the US) a 5% non-resident tax on the sale price went
    directly to the Spanish govt. instead of to me. This was indicated in the
    notarized document of the sale.

    As I understood it, this is a tax only applied to foreigners since they are
    not likely to file income taxes in that country, and if taxes were to be
    filed in the country of the sale then any capital gains taxes owed would be
    reduced by the 5% already paid or a refund could be due. (A refund is not
    likely since the assessed value stated in the inheritance document is very
    low -- they've had an even bigger jump in real estate prices than we've had
    here and the assessed values are low). I do not intend to file there.

    I assume I list the gains from the sale in Schedule D as a long term gain.

    I need to know if there is some place to get credit on my US taxes for the
    5% paid in Spain. (Form 1116?, Form 1040 Shed.A, Line 8?...), and whether to
    use the full sale price or the amount after the 5% reduction for the sales
    proceeds.

    Thanks.



    "Phil Marti" <[email protected]> wrote in message
    news:[email protected]
    "AM" <[email protected]> wrote:
    I assume I list the gains from the sale in Schedule D as a long term gain.
    Yes, on line 8 of Schedule D. Show "inherited" as the date acquired and the property's fair market value on the decedent's date of death as the basis.
    I need to know if there is some place to get credit on my US taxes for the 5% paid in Spain. (Form 1116?, Form 1040 Shed.A, Line 8?...),and whether to use the full sale price or the amount after the 5%reduction for the sales proceeds.
    If it was an income tax, see Form 1116 and use the full price, minus other expenses of sale, as your sale price. If it was a property transfer tax imposed on the sale, it's a cost of sale which reduces your net proceeds on Schedule D. -- Phil Marti Clarksburg, MD
    Thanks for the help, Phil. I'm adding this to misc.taxes to see if anyone
    knows more about the tax I had to pay at the time of the sale such as
    whether it can be considered an income tax or not.


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