Do I need to pay taxes on a property sale in Panama, if I already paid Panama taxes on that sale?

Asked about 1 year ago - Sugar Land, TX

I hold a Green Card, but I bought a property in Panama before coming to the US (I was not resident by then). Now I am selling the property and I will pay Panama taxes there (I believe it is 5% of total property value). Do I still have to pay US taxes? If so, how much? Can I get credited the tax paid in Panama? How does it work with overseas properties?

Thanks.

Attorney answers (3)

  1. Oscar Javier Ornelas

    Pro

    Contributor Level 12

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    Answered . As a general rule, permanent residents (aka Green Card holders) are treated the same as US citizens for federal income tax purposes -- which means you are generally taxed on your world-wide income. Whether you purchased the property prior to becoming a US permanent resident may not matter for US tax purposes since you are selling the property now (when you are a US permanent resident). The amount of US tax on the sale of the property in Panama and the availability of a US tax credit for Panama tax paid on the sale depends on a number of facts and circumstances not described in your fact pattern. Please contact a tax advisor for a more specific answer to your issue.

    Anything contained in this response is for informational purposes only and neither the author nor The Ornelas Firm... more
  2. Cheryl Rivera Smith

    Contributor Level 20

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    Answered . This isn't a legal question, it is a tax question. Go to www.irs.gov and you can get help there.

  3. John P Corrigan

    Contributor Level 19

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    Best Answer
    chosen by asker

    Answered . For US purposes you are taxed on world-wide income so you are required to report the sale of the Panama property. On your Federal income tax return you will then be able to claim a foreign tax credit (Form 1116) for the Panamanian taxes already incurred. So if the US tax is 20% and you already paid 5% to Panama then you would pay the additional 15% due on your US tax return.

    My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a... more

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