How to plan for foreign income from property sale outside USA?

@thadley52 , 

Assuming that you are US person ( citizen/GreenCard/Resident for Tax Purposes ), tax-home in the USA,  a tax treaty between US and that "other " country is in effect, 

(a) you should prepare the foreign return including the capital asset disposal first.  This will allow you to compute the taxes you paid on the sale of the asset. All under the tax laws of that other country.

(b) Tell TurboTax that you have  a sale of capital asset to report  ( note that depending on prior/current use of the asset -- rental, second home or whatever --- the forms to fill out may be different).  TurboTax will need the following info from you ( to prepare the disposal  under US tax laws ) --

     1. How did you acquire the asset;

     2. when ,

     3. acquisition cost -- if by inheritance then the FMV at the time of passing of the decedent etc. ,; 

     4.  Cost of any improvements during the holding period; 

     5. If rented out at anytime during the holding period, then the accumulated depreciation allowable -- even if you did not  claim the depreciation

     6.  Sales expenses, including commissions, title work, any preparation cost (like freshening up painting etc.-- things that were done just to sell the property),  transfer tax, recording fees etc.

     7.  Sales Price

3.  The above will allow TurboTax to compute  the gain and taxation thereon per US tax laws

4.  Then under "Credits and Deductions " tab , select  Foreign Tax Credit --- this will walk you through the filling out of form 1116.  The form will ask for the Foreign Source income ( this is generally  the capital gain per US laws ) and also the foreign taxes you have paid to the foreign taxing authority.

While US will recognize the full amount of taxes paid , the allowable credit is the lesser of actual paid  and that levied by the US on the same doubly taxed income.  The rest of the credit is available to carry back a year or forward for 10 years.  The carry back or carry forward credit is available only when you have foreign source income in those years.

Does this answer your query ?  Is there more I can do for you ?