Question on FBAR and repatriating money to USA

[nrkv]

Hello,
For the purpose of simplicity, I’m using all amounts in USD.
I recently sold empty land (not farm land, property land but never built a house) in a foreign country and money is deposited to my foreign account in foreign currency.
The sale value is $70K and of which the original investment is $20K. I have been told that I need to pay long term capital gain taxes on $50K in the foreign country, which I’ll do. Let’s say that’s 15% tax.

For US, I’ll file FBAR this year and maybe also form 8938 because the amount is more than $50K based on IRS rules. If I want to bring (repatriate) that $70K to US, how is this money treated? It is not foreign earned income because it’s not rents, dividends, interest etc. Is it considered foreign income and if so, do I owe according to my tax bracket (35%+5%)? Also, do I need to pay tax on 70K? Or $50K (excluding investment of $20K)? Or on $59.5K ($70K minus 15% foreign tax paid)?

My current CPA is not familiar with foreign tax laws and posting here while I get a recommendation.

Thank you!

[exodusNH]

Hello,
For the purpose of simplicity, I’m using all amounts in USD.
I recently sold empty land (not farm land, property land but never built a house) in a foreign country and money is deposited to my foreign account in foreign currency.
The sale value is $70K and of which the original investment is $20K. I have been told that I need to pay long term capital gain taxes on $50K in the foreign country, which I’ll do. Let’s say that’s 15% tax.

For US, I’ll file FBAR this year and maybe also form 8938 because the amount is more than $50K based on IRS rules. If I want to bring (repatriate) that $70K to US, how is this money treated? It is not foreign earned income because it’s not rents, dividends, interest etc. Is it considered foreign income and if so, do I owe according to my tax bracket (35%+5%)? Also, do I need to pay tax on 70K? Or $50K (excluding investment of $20K)? Or on $59.5K ($70K minus 15% foreign tax paid)?

My current CPA is not familiar with foreign tax laws and posting here while I get a recommendation.

Thank you!

It would be helpful if you posted the country. How taxes work depends on bilateral tax treaties.

[v42]

I am not a lawyer/ CPA but I don't think there is any taxation on simply moving money across your own accounts. If it's a gift from a different individual then some reporting does apply above a larger threshold. The US is happy to have your foreign currency converted to USD and moved here. If anything, the foreign country might impose taxes or limits on repatriation of money out of their control.

[Badinvestor]

I don't know of any tax on bringing money into the US. However, if you are a US resident or citizen, I'm pretty sure you owe the US tax (presumably LTCG tax) on the sale proceeds of $50k, and you can get US foreign tax credit on the tax you paid in the foreign country. (A tax treaty might get you out of paying the US tax, but that doesn't seem very likely to me.) You may also owe US tax on any increase in the US dollar value of the foreign currency you were paid between the time of receipt and the time you convert it to US$; see

https://www.law.cornell.edu/uscode/text/26/988

(I am not a tax lawyer or CPA.)

[grabiner]

I don't know of any tax on bringing money into the US. However, if you are a US resident or citizen, I'm pretty sure you owe the US tax (presumably LTCG tax) on the sale proceeds of $50k, and you can get US foreign tax credit on the tax you paid in the foreign country.

You will have to file Form 1116 with your taxes to get this credit. Depending on your tax situation and the foreign tax rate, you might or might not get all your foreign tax back as a credit, but you should get at least most of it back.

[Thesaints]

Unless excluded by bilateral tax treaty, you owe capital gains taxes in the US (and maybe in your state of residence as well) even if you don’t repatriate the money.
The act of transferring the money to the US is not a taxable event per se.

[halfnine]

...The sale value is $70K and of which the original investment is $20K...

I am assuming based on what you have written that this is correct and you are using two different exchange rates. One reflecting the rate on the day of purchase and the other exchange rate on the date of sale.