I live and pay taxes in the U.S. and I have a small piece of land in Europe that I will be selling soon.
How will I report this sale on my 2009 U.S. income tax return? How do I deal with the fact that I file my income tax returns in U.S. dollars but the sale of the land will be done in a foreign currency? I don't know much about tax laws, so please try to be as specific as possible.
Thanks.
If a profit, capital gains (schedule D). If a loss, and you held it for personal use, ignore it. If you held it for investment, again schedule D.
If you convert the proceeds to US dollars, use that as the sale amount. Otherwise, use the exchange rate on the day of sale. (If you convert the currency later, you might have a taxable gain on the currency.)
Seth
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