If you are a resident of the US (i.e. a citizen or permanent resident/green card holder) then you pay income taxes on income "world wide". If you paid taxes on the gain in another country, then you may and probably qualify for a foreign tax credit for taxes paid to Albania (we have no tax treaty with Albania). There is not a 20% tax to the US if you are filing world wide taxes here in the US; it's the tax bracket you are in based upon US tax laws and the top capital gain rate is 15% and on top of that you also would get the credit for taxes paid overseas. Also, if your parents gave you the house, their basis is your basis so the gain may be far less than you think. However, you will have a complex tax comutation if you sell it and you should get a preparer very well versed in this type of tax return.
Eric P. Rothenberg, P.C.
Orsi Arone Rothenberg
160 Gould Street-Suite 320
Needham, MA 02494-2300
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When you pay income taxes to a foreign country, ou should received a credit for the taxes you paid to Albania. Your individual income rate will be based on our US tax bracket which is based on your worldwide income less your personal exemptions, itemized or standard deduction and any other adjustments to you income.
See you tax preparer to have you taxe computed before you decide to sell the house and have a projection prepared both with and without the sales for 2012.
Phillip M. Smith Jr.
Los Angeles Tax & Business Attorney
Call: 855 IRSTAXBIZ
THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. His phone number is 323-292-4116 or his email address is firstname.lastname@example.org.
The previous attorneys are correct. You are taxable on all worldwide income, but you will receive a credit for taxes paid in the foreign jurisdiction. Also, treaties between the two countries might be relevent. They will sometimes define which country can tax the transaction.
In addition to the other answers, you can also elect to deduct the taxes paid to the foreign county. Unfortunately, you have to grind the numbers to be sure. The answer will depend on what the other numbers on your tax return look like. Don't forget the new form we now have to file if we own any equity!!! See Form 8938, “Statement of Specified Foreign Financial Assets” (November 2011) Certain U.S. taxpayers holding specified foreign financial assets with an aggregate value exceeding $50,000 will report information about those assets on new Form 8938, which must be attached to the taxpayer’s annual income tax return. Higher asset thresholds apply to U.S. taxpayers who file a joint tax return or who reside abroad (see below).
And be sure to mark Yes at the bottom of schedule B of Form 1040, and you might have to file form Form TD F 90-22.1.....The IRS has made this a big deal for some taxpayers. be sure you "over" comply.......I only wish I could make this up!!
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