Do you own foreign property that you are renting out or looking to sell? Despite it being located outside the U.S., it still must be reporting on your U.S. tax return as long as you are considered a U.S. person by the IRS for tax purposes.
Foreign Rental Property
Renting out property you own outside of the U.S. still must be reported to the IRS on your yearly U.S. tax return (as long as you are considered a U.S. person for tax purposes by the IRS). Income and expenses must be reported in U.S. dollars, and depreciation must be taken on the assets. You are also most likely required to report the rental to the tax agency of the country the property is located in. If there are any taxes owing in the foreign country, they can be used to offset any taxes calculated in the United States.
Sale of Foreign Property
If the time has come to finally sell the investment property you have been holding overseas, you should be aware that the sale still needs to be reported to the IRS on your yearly tax return in U.S. dollars. Even if there wasn’t a gain on the sale in the foreign country. As with most all foreign income, if there is foreign tax paid on the gain of the sale of the property, it can be used to offset any U.S. taxes that might be owing.
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Any tax advice herein is based on the facts provided to us and on our interpretation of tax legislation as it reads at the time the advice is provided. Tax law is subject to continual change, at times on a retroactive basis and may result in incremental taxes, interest or penalties. We are not responsible for updating our advice for changes in law or interpretation after the date the advice is provided. Every tax situation is different. We are not responsible for the tax implications to any individual or entity that may act on this advice.