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How do I handle my foreign rental property?

Article ID: 49
Last updated: 03 Oct, 2018
Revision: 5
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By Jason Watson ()

Foreign rental properties owned by United States citizens are treated the same way as domestic rental properties with the exception of depreciation. Under IRC Section 168(g)(1)(A), ‘any tangible property which during the taxable year is used predominantly outside the United States’ must use the alternative depreciation system as specified in the Internal Revenue Code. Therefore, foreign rental properties must be depreciated over a much longer, 40 year period.

Any foreign taxes imposed on the rental income may be deducted as foreign taxes paid.

Please visit www.watsoncpagroup.com/rental-property-taxes/ for our home page on rentals.

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item What is foreign earned income exclusion?
item What is considered foreign earned income?

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folder Rentals FAQs - Watson CPA Group

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