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Hi-does anyone know the guidelines for reporting rental imcome for housing in CR to the US gov’t? Saw something on IRS site about foreign owners renting property in US but not the other way around….
thanks!As a US citizen you have to report worldwide income (rental income included) on your US tax return. But remember… rental income is that which is left after all expenses (including depreciation) that you’d include on your Schedule E of your 1040 are deducted. Many times operating a rental property results in a net loss for tax purposes.
That’s the company line… but if you follow in the footsteps of Charlie Rangel who owns a rental in the DR you might just forget to report the income as he did. There’s a bunch of other tax, rental, and real estate issues circling him at the moment. He’s a US Congressman from NY currently serving that’s a BIG part of the change America is enjoying these day… along with a Treasury Secretary that “forgot” to report a bunch of income that blamed the “mistake” on his use of TurboTax (a tax prep software package) for the error… and STILL managed to get confirmed!!! Then there’s the number of other politicians that have had to step away from team Obama for “forgetting” to report income.
Here’s Charlie’s Bio from his website…
“As chairman of the Ways and Means Committee, the first African American to reach that post, Congressman Charles Rangel presides over tax revenue legislation and commands oversight authority over the major issues of the day – economic policy, international trade, welfare, Social Security, Medicare, and health care. He serves as the vice chairman for the Joint Committee on Taxation.”
He’s sounds like a pretty smart guy I’d have to guess… so if he could make a mistake I guess you could too!
Bottom line… see a qualified tax professional and you’ll have no problems with your taxes. Many moons ago I worked for the Treasury/IRS… and owning a rental property is a ground ball as far as tax issues. It can be one of the more tax friendly items on your return. It’s the landlord thing that is the real problem! Good Luck!
Thanks so much for your quick reply! I think I will see a tax professional just to make sure. The last thing I want is the IRS on my back! I am in the accounting/finance profession but that is not the same as being a tax accountant, I work more for private business and each company I worked for had the auditing agency prepare company taxes as well. People always assume I “do taxes” when there are so many areas or specialties in accounting as there in law and other fields. I could of continued searching through the websites for the IRS but I figured there were some savvy people on Scot’s site 🙂
have a great weekend,
Kathleen
It’s really not a complicated tax issue, but being sure to make a reasonable effort to properly report income is usually a good defense even if you get called in on the carpet by the IRS. Placing the rental property in an S.A. and running the income through it could be another idea but will then create a tax reporting issue in CR and an even more complicated US tax reporting issue.
Keep in mind that reporting income from another country puts you on the radar for a number of other reporting requirements such as reporting bank accounts (no matter how small) that you may maintain in the country.
If you plan on doing it right… be sure you know what you’re getting yourself into.
KISS…. Keep It Simple Stupid.
Edited on Mar 07, 2009 16:39
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