Property owned before becoming a LPR

[Michael2017 368]

Hi,

 

I am owning a house back in Europe. I think to understand that, If I want to sell it ever while being a LPR of the US, I would be taxed on the captial gain it produced.

It is a family home and I got it for free. As far as I understand from my research, the value on the date when i become a LPR would be the starting point for US taxation,

and any gain after that needs to be accounted. Now, the main question. How to proof the value on day 0? Is an appraisal from a foreign qualified service enough or are other documents required? What if there is no appraisal? 

[Italian_in_NYC 259]

You did not get it for free, at least for the IRS. It was either gifted or inherited.

If it was gifted, then the adjusted basis would be the basis of the donor (likely, whatever they paid for it).

If it was inherited, the adjusted basis is the fair market value at the date of death of the person who left it to you.

Use the exchange rate at the date of the transaction (date of death, or date of original purchase, if gifted).

[Michael2017 368]

The property was gifted, and that about 10 years before I would reach LPR status. While I could reasonably estimate the value,

there is no way this could be exact. What documents should be established to satisfy IRS`s potential request for evidence and how we came to such estimate? We have no appraisal that was made at the time it was gifted.

[Italian_in_NYC 259]

4 hours ago, Michael2017 said:

The property was gifted, and that about 10 years before I would reach LPR status. While I could reasonably estimate the value,

there is no way this could be exact. What documents should be established to satisfy IRS`s potential request for evidence and how we came to such estimate? We have no appraisal that was made at the time it was gifted.

If it was gifted your basis is the basis that the donor had, so likely how much he/she/they paid for it. If they inherited it, then it'd be the FMV on the date they inherited it.

The IRS is HIGHLY unlikely to ask for that. In case, they would need some reasonable proof of the basis (original purchase docs and gift declaration), but seriously, don't worry about it.