Capital Gains Tax On Property Abroad

Posted on November 17, 2011 by Admin
Capital Gains Tax On Property Abroad

Capital Gains Tax On Property Abroad

Owning rental property can be a boon for the taxpayer due to the tax advantages, and can help provide income for retirement years. Rental property values traditionally increase and they are at least partially paid for by the tenants.

Overview of Residential Rental Property Tax Rules

Like most tax topics, the IRS rules concerning residential rental property tax deductions and income are complex and vary from minor tweaks to major differences depending on taxpayer circumstances and types of rental property. This overview of rental income and allowable expenses (deductions) is applicable to the rental owner who:

  • Owns at least a 10% percent of a residential rental property (e.g., house or apartment)
  • Actively manages the rental
  • Does not use the rental for personal purposes (as in living in it at any time)
  • Wants to make a profit from rental income (some taxpayers do not)
  • Is not a professional real estate agent
  • Does not provide services for tenant "convenience" such as changing linen or providing maid service
  • Uses the cash method of accounting for income tax returns, not accrual basis

What Kinds of Income Does the IRS Consider Rental Income?

Rental income is any payment owners receive for occupation or use of their property. It includes: