Reporting Sale of Inherited Foreign Property for Retired Taxpayer

Forum|Forum|4 months ago
February 27, 2026
2 replies
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I want to confirm I am handling this correctly.

The taxpayer is retired and normally does not file due to low income. She inherited a home outside the U.S. from her mother and sold it. The proceeds were split 50/50 with her sister, and her share was $53,000, which was wired to her U.S. account. Taxes were paid on the sale in the foreign country.

My understanding is she must file a U.S. return for the year of sale and report the transaction as the sale of inherited property on Form 8949 and Schedule D using the stepped-up basis, and claim a foreign tax credit if applicable.

Am I missing any required reporting (such as FBAR, Form 8938, or anything else)?

ProSeries Professional

BobKamman

Level 15

She's not required to file if she has no gross income. After stepped-up basis, were the net proceeds less than the value at date of death? Gross proceeds are not income, and it doesn't appear that the sale will be reported to IRS. You don't take foreign tax credit against zero US tax. I would tell her I'm sorry about her loss (the mother, not the property sale) and send her home. Others might follow the "when in doubt, prepare a return and charge them for it" doctrine.