Friday, Jul 24, 2026 The claims desk. Receipts included. POWERED BY LENZ ↗
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FINANCE

The Claim

The Internal Revenue Service does not impose U.S. capital gains tax on the sale of foreign real estate that is a primary residence for a U.S. citizen who is a foreign resident taxpayer.

Verified by Lenz ·

The Short Version

The claim is not supported by U.S. tax law. U.S. citizens abroad are generally taxed on worldwide income, including gains from selling foreign real estate. A qualifying foreign primary residence may receive the same IRC §121 exclusion as a U.S. home, but that exclusion is limited, conditional, and does not eliminate tax on all such sales.

Caveats

  • The main omission is that IRC §121 is a capped exclusion, not a blanket exemption: generally up to $250,000 of gain, or $500,000 for some married joint filers.
  • Eligibility rules matter. Ownership and use tests, prior use of the exclusion, rental/business use, depreciation, and nonqualified use can reduce or eliminate the benefit.
  • Foreign residency does not remove U.S. filing or tax exposure; separate foreign-country taxes may also apply, sometimes with foreign tax credit interactions.

The Receipts

  1. Publication 523 (2025), Selling Your Home

    Internal Revenue Service

  2. U.S. citizens and resident aliens abroad

    Internal Revenue Service

  3. 26 U.S. Code § 121 - Exclusion of gain from sale of principal residence

    Legal Information Institute (Cornell Law School)

  4. Frequently asked questions about international individual tax matters

    Internal Revenue Service

  5. IRS Releases Publication 523 (2016), Selling Your Home

    Tax Notes

  6. Sec. 121 Exclusion of gain from sale of principal residence

    Tax Notes

  7. Sale of residence - Real estate tax tips

    Internal Revenue Service

  8. United States - Individual - Income determination

    PwC

  9. IRC Section 121(b)(5) - Exclusion of gain from sale of principal residence

    Bradford Tax Institute

  10. U.S. Capital Gains Tax on Selling Property Abroad

    H&R Block

+ 17 more sources — see the full list on Lenz

Filed Under

Internal Revenue Code Section 121IRSIRS Publication 523United States

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