Do I need to report income from a sold property in another country?

I am planning to sell a house in Albania (Europe). This house was given to me as a gift by my parents. If I sell this house, the Albanian government will hold 10% of the total sale in taxes. Do I have to report this money to IRS even though I paid the Albanian government 10%?

If you are a resident of the US (i.e. a citizen or permanent resident/green card holder) then you pay income taxes on income “world wide”. If you paid taxes on the gain in another country, then you may and probably qualify for a foreign tax credit for taxes paid to Albania (we have no tax treaty with Albania). There is not a 20% tax to the US if you are filing world wide taxes here in the US; it’s the tax bracket you are in based upon US tax laws and the top capital gain rate is 15% and on top of that you also would get the credit for taxes paid overseas. Also, if your parents gave you the house, their basis is your basis so the gain may be far less than you think. However, you will have a complex tax comutation if you sell it and you should get a preparer very well versed in this type of tax return.

Eric Rothenberg