I sold an apartment in India.

Forum|Forum|1 year ago
March 13, 2025
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I sold an an apartment in India. I am reporting the sale in second home category. I paid taxes in India on capital gains. How do I claim the credit for taxes paid in India?

While filling details for the sale, no where there is an option to select this as foreign income. When I look for form 1116, it says that no foreign income found.

Please help.

Rajesh K.

Best answer by DaveF1006

Here is the proper way to report this.

Wages and income
Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto) or investment income if working in Turbo Tax Desktop
Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’
The first screen will ask if you sold any investments during the current tax year. This includes any sale of real property held as an investment property, so answer yes to this question.
Since you did not receive a 1099-B, answer “no” to the 1099-B question
Choose type of investment you sold - select everything else
What type of investment other
Proceed through the interview until finished with this section.

To claim the Foreign Tax Credit.

Go to Federal
Deductions and credits
Estimate and other taxes paid
Foreign Tax Credit>start or revisit
As you go through the screens, when it asks "Tell Us About Your Foreign Taxes" select none of these apply.
When it asks if you wish to take the deduction and credit, take the credit.
Continue through until you reach a screen that says "No other income or expenses" Say no
Continue through until it asks the income type, say Passive Income
Next add a country pick India
Other Gross Income say Sale of Personal Residence and the Gross Amount of the sale
Continue through the interview until it asks for the foreign taxes you paid, here record the amount. Report this as other income.
Now you are done reporting the foreign taxes. Just keep going through the section without making any more entries. You will have finished reporting your gross income from the sale and the foreign taxes paid.

DaveF1006Answer

Here is the proper way to report this.

Wages and income
Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto) or investment income if working in Turbo Tax Desktop
Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’
The first screen will ask if you sold any investments during the current tax year. This includes any sale of real property held as an investment property, so answer yes to this question.
Since you did not receive a 1099-B, answer “no” to the 1099-B question
Choose type of investment you sold - select everything else
What type of investment other
Proceed through the interview until finished with this section.

To claim the Foreign Tax Credit.

Go to Federal
Deductions and credits
Estimate and other taxes paid
Foreign Tax Credit>start or revisit
As you go through the screens, when it asks "Tell Us About Your Foreign Taxes" select none of these apply.
When it asks if you wish to take the deduction and credit, take the credit.
Continue through until you reach a screen that says "No other income or expenses" Say no
Continue through until it asks the income type, say Passive Income
Next add a country pick India
Other Gross Income say Sale of Personal Residence and the Gross Amount of the sale
Continue through the interview until it asks for the foreign taxes you paid, here record the amount. Report this as other income.
Now you are done reporting the foreign taxes. Just keep going through the section without making any more entries. You will have finished reporting your gross income from the sale and the foreign taxes paid.

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moka7310Author

Thanks for step by step instructions. This really helped. I have one more question, The federal tax give credit for foreign taxes paid but NJ state is still charging tax on the gains. Is that normal?

Thanks again for your help.

AmyC

Employee

Yes. Many states do charge tax and NJ is among them. It specifically states on the credit for double taxation (COJ), not to give credit for a foreign country.
Resident Income Tax Return Instructions states:

Do not include on line 1:

• Income subject to tax by a foreign country, U.S. possession, or territory;

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