GLOSSARY · VISA-HOLDER FINANCE

Cost basis in a foreign currency

For a US taxpayer, the gain on property bought and sold in another currency is figured in dollars: the cost at the exchange rate on the date of purchase and the sale price at the rate on the date of sale. When the foreign currency falls against the dollar between the two dates, the dollar gain is smaller than the gain in that currency and can be a loss; when it rises, the dollar gain is larger.

Also called: exchange rate on each date, historical exchange rate basis, gain in dollars on foreign property
FORMULA
Dollar gain = sale price ÷ sale-date rate − cost ÷ purchase-date rate, with each rate in foreign currency per dollar
COMPUTE IT WITH YOUR NUMBERS
Selling property in India: tax in both countries →Selling property in India: what tax do I pay in each country, and what do I keep?
LEARN IT PROPERLY
CHAPTER · TWO-COUNTRY MONEY · FOUNDATIONSIndian Funds and Shares for a US TaxpayerCHAPTER · TAXES ON BOTH SIDES · STRATEGIESIndian Property: Buying, Renting and Selling
RELATED TERMS
Step-up in basisForeign tax creditWorldwide income
SOURCES
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