Today TaxMama hears from Darl in Texas who asks. “Are there any U.S. tax ramifications on property in Mexico that is owned and sold by a U.S. citizen, and for which the monies would be deposited into a U.S. bank account?”
Of course. It’s all taxed.
As a U.S. citizen or U. S. resident, you are responsible for reporting all your worldwide income.
You report the sale just like any other sale here in the U.S.
If you held the property for more than a year, you’ll pay less in taxes, because of the long-term capital gains.
And you will get a reduction in the U.S. taxes to reflect the taxes you paid in Mexico on the sale of the property. Use Form 1116, Foreign Tax Credit.
Or you’re entitled to deduct the Mexican taxes as other taxes when you use itemized deductions.
I hope you make lots of money!
And remember, you can find answers to all kinds of questions about worldwide income, and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online