More details to this question:
Is there a legal way to minimize capital gains taxes when selling a vacant lot in Germany, for example by using the proceeds to pay off the mortgage for our primary residence in the USA? Am I even liable for capital gains taxes - since I will not have to pay any taxes in Germany - or are the proceeds counted as regular income? My main problem is that I cannot determine what the true value of the lot was when it was gifted to me 26 years ago.
1 ANSWER
Bruce Givner
Paying off a mortgage is not a deduction. As a U.S. citizen or resident you are liable for taxes to the U.S. government on your worldwide income or gains. If you cannot determine the basis (the donor's basis), then you must discuss with your CPA to determine how to proceed. Presumably you can only use your best estimate and include that information (that it is your best estimate) on your return.
Yes, there are ways to minimize capital gains taxes, even on an asset that is being sold in Germany. For example, you can trade that property for an investment property in the U.S.
Answered on Jan 18th, 2011 at 2:58 PM