USA Marriage and property abroad

[Stefano]

Dear Sirs,
I am an Italian citizen fiance with an Us resident citizen and we are going to apply for the K-1 visa.
In Italy I have a share of a real estate property that would be not so easy to get ride of quickly.
We would like to know if, after getting married, my bride will be subject to taxation in Us for that property
(In that case, how much will be the taxation to be considered for her: 100% or just the share I have ?).
Thank you for your consideration in this matter.
Cordially,
Stefano

 

[Andrew312]

Dear Stefano:

That's an interesting question and the answers could be different depending on the assumptions we make.

For example, after you are married, and if you file a joint return, and if you sell the property, the gain would be reported on that joint return. So, in a sense, your future wife would be subject to tax on the sale of the property. But, that's a lot of "if's."

Can you give us an idea of the value of the property, how you acquired your interest in it, what is the nature of the interest (e.g., fee title, beneficial interest in a trust, ownership interest in a partnership that in turn owns the property, etc.), does the property generate any kind of income currently, do you expect to hold the property indefinitely? etc.

Best,
Andrew

 

[Stefano]

Dear Stefano:

That's an interesting question and the answers could be different depending on the assumptions we make.

For example, after you are married, and if you file a joint return, and if you sell the property, the gain would be reported on that joint return. So, in a sense, your future wife would be subject to tax on the sale of the property. But, that's a lot of "if's."

Can you give us an idea of the value of the property, how you acquired your interest in it, what is the nature of the interest (e.g., fee title, beneficial interest in a trust, ownership interest in a partnership that in turn owns the property, etc.), does the property generate any kind of income currently, do you expect to hold the property indefinitely? etc.

Best,
Andrew

Dear Andrew,
Here the answers to your questions:
The value of the property can be estimated around 150K $, I got the share since my father passed away,
at the moment doesn't generate any kind of income, my property share is 1/10 and I don't know if I can get rid of it easily because, for example, paying a notary to sell my share can cost me, it seems, more than the taxation we are talking about.
Thank you for your help on this matter.
Cordially,
Stefano

 

[Andrew312]

Dear Stefano,
Thanks for the additional information. There is a chance that the Italian notary fees could exceed the US tax on a sale, i.e., $150,000 * 10% * 20%, or $3,000 : ) (This assumes negligible tax basis, a 20% tax on long term capital gains and no foreign tax credit / no Italian tax on the sale). This would only apply at some point in the future if and when you sell.
Best,
Andrew