U.S. Income Tax for Rental Real Estate sold in Colombia.
For U.S. expats, when selling a rental property located in either the U.S. or Colombia, the professionals at USATax.co can help you navigate the unique tax circumstances.
Colombia’s real estate market has been quoted as “are an absolute global bargain” and popular artists like J Balvin, Karol G, and Nicky Jam in their remix to “Poblado” have literally sang about famous El Poblado penthouses. It’s no surprise that we have seen flocks of U.S. investors looking to scoop of their own piece of Colombia’s real estate offerings.
Pair this with the increase of tourism to Colombia. As the old reputation of being plagued with cartels and violence begins to totally disappear, Colombia has created very attractive market for foreign investors to own rental properties in Colombia.
U.S. Taxes for Selling a Rental Property Abroad
In the U.S., if you sell a property, you’ll need to report it and may need to pay a capital gains tax. The same rule applies if you sell property outside of the U.S. In addition, a capital gains tax comes into play anytime you make money from an investment, such as selling property, stocks, or bonds.
Any gain that you earn can be taxed at different rates depending on:
Selling a rental property in Colombia or any other foreign country, it can become a bit more complicated than selling in the U.S. When it comes time to actually report the sale of a foreign rental property, which forms you need depends on various factors, and if the sale wasn’t in USD, then you’ll need to calculate the exchange rate at the time of the sale.
When selling a rental property in Colombia, some of the possible forms involved in the filing include:
Double taxation and the sale of a rental property in Colombia
With the sale of your rental property in Colombia, you likely will have to pay the equivalent of a capital gains tax to the DIAN. However, it is very unlikely that you will be double-taxed with the IRS. There are different strategies to avoid double taxation, such as the Foreign Tax Credit, that your tax preparer can apply to your return.
Consult with USATax.co For Selling a Rental Property
It’s essential while selling a rental property in the U.S. or Colombia to understand all the tax implications from licensed and experienced tax professionals. If you’re thinking about selling your property, or it’s already sold, get in touch with USATax.co to confidently report and file all according to your reporting requirements.