Question

sale of farm land

Forum|Forum|6 years ago
May 13, 2020
1 reply
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I am resident alien for tax purposes. I have an unused farm land in my home country that I want to sell. I had been the owner of the land for almost 20 years. How is the income from the sale of such land taxed in US. Also, does the final sell price that i report consider the amount that i invested in purchasing the land and the period for which i had held? Will this income be taxed separate from my US income or will it be added to my US income and then taxed? Thanks

LudwigVan_fan

Employee

Information for Resident Aliens - scroll through the list for additional information

https://www.irs.gov/individuals/international-taxpayers/resident-aliens

If you meet the rules for resident alien, then it appears you are pretty much taxed the same as a U.S. citizen. Assuming that is the case, the sale of your farmland in another country would be taxed in the U.S..

Sales Price $xx,xxxx

Less commission

and other expenses of sale ( x,xxx)

Less cost or purchase price ( x,xxx)

--------------------

equals gain or loss on sale x,xxx

Assuming you would be taxed the same as a U.S. Citizen, it would be included in your world wide income. Gain should be taxed as long-term capital gain.

If you pay taxes to the country the land is located in on the sale or gain on sale, you should be able to utilize foreign tax credit as well on the U.S. Taxes.

I would also look into whether there are any treaty exclusions/benefits, etc., between the U.S. and the country the land is located in.

**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**

R

rajpbgAuthor

Hi,

Thanks for your reply. I want to clarify a point here. YOu mentioned that the gain obtained from the sale of the land would be included in my world wide income. So, does that mean that the gains obtained from the sale of the land will be added to my yearly income and then taxed as incomes are taxed or will it be considered as a separate income and taxed at a certain flat rate other than the yearly income.

LudwigVan_fan

Employee

Unless a treaty, etc., would apply, it would be included in your gross total income. However, the gain as you described it should be taxed as long-term capital gains...which are generally taxed at a lower rate than your ordinary income.

As I mentioned before, there may or may not be a treaty involved between the U.S. and whatever country the land is located in. If there is a treaty, the provisions contained in the treaty would applicable.

**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**