Owning property abroad: what is and isn't reportable
Many families own a home or apartment in Taiwan, China, or elsewhere — bought before moving, or inherited from parents. For a U.S. citizen or resident, the key is to separate owning the property from the money it produces.
| Event | U.S. treatment (citizens and resident aliens) |
|---|---|
| Simply owning the property | Not a taxable event |
| Property held directly — FBAR | Not reported |
| Property held directly — Form 8938 | Not reported |
| Property held through a foreign company | The company interest may be a specified foreign financial asset on Form 8938; other forms may apply |
| Renting it out | Rental income is reportable (worldwide income) |
| Selling it | Any gain is reportable; foreign tax paid may be creditable |
| Inheriting it from a nonresident | Generally not income; Form 3520 if gifts and bequests from related foreign persons exceed $100,000 in the year |
Why a house is treated differently from a bank account
The FBAR covers financial accounts, and Form 8938 covers specified foreign financial assets. Real estate you own directly is neither, so the IRS comparison of the two forms lists "foreign real estate held directly" as not reportable on either one.
Two important exceptions:
- Held through a foreign entity: if the property is owned by a foreign company you have an interest in, the company itself is a specified foreign financial asset for Form 8938, and its value includes the real estate. Foreign entities can also trigger other U.S. filings — get professional help.
- The money around the property: rent collected into a Taiwan bank account, or sale proceeds held there, count toward the FBAR $10,000 test and your Form 8938 threshold.
Property taxes on a foreign home
The 2025 Schedule A instructions say not to include foreign taxes you paid on real estate as state and local real estate taxes. So property tax on your personal home in Taiwan is generally not deductible as an itemized deduction. If the property is a rental, expenses are handled on the rental side — see Foreign rental property and U.S. taxes.
Inheriting property from parents abroad
A bequest is generally not income to the person who receives it. But inheritances from a nonresident alien or a foreign estate are part of the Form 3520 reporting rules: if gifts and bequests from related foreign persons total more than $100,000 for the year, you must report them on Form 3520 Part IV. A house is reported at its fair market value. See Form 3520: reporting large foreign gifts.
Selling foreign property
U.S. citizens and resident aliens are taxed on worldwide income, so a gain on selling property abroad is reportable on your U.S. return — even if the sale was taxed in the other country, and even if you never move the money to the U.S. For a step-by-step look at the sale and the later transfer, see I sold property overseas and moved the money to the U.S. — what must I report?
Currency matters
Everything on a U.S. return must be in U.S. dollars, and the IRS's general rule is to translate each item at the exchange rate in effect when you pay or receive it. That usually means:
- Your cost (purchase price and improvements) at the exchange rates when you paid them
- Your sale price at the exchange rate when you sold
If the Taiwan dollar moved a lot between purchase and sale, your gain in U.S. dollars can be very different from your gain in Taiwan dollars — larger or smaller. A foreign-currency mortgage adds another layer: repaying it can create a separate currency gain or loss. Both situations deserve professional review.
Foreign tax and the foreign tax credit
If you paid qualifying foreign income taxes on the gain, you may be able to claim a foreign tax credit on Form 1116 (or deduct them) so the same gain is not fully taxed twice. See the foreign tax credit guide.
Was it your main home?
IRS Publication 523 explains the exclusion of up to $250,000 of gain ($500,000 for most married couples filing jointly) when you sell a home that meets its ownership and use tests. If you lived in the foreign home as your main home, ask a tax professional whether your sale qualifies before you file.
Purchase contract and price, dates and costs of major improvements, inheritance documents and the property's value at the date of death, sale contract, closing costs, foreign taxes paid, and the exchange rates you used. Selling years later is much easier with these in one place.