Expatriate Tax Returns Advises U.S. Expats on Tax Rules for Foreign Real Estate and Rental Income

As more U.S. citizens diversify their portfolios by investing in foreign real estate, Expatriate Tax Returns reminds expatriates that overseas property ownership comes with important U.S. tax responsibilities.

While owning property abroad can be financially rewarding, the tax reporting requirements can be complex—especially when rental income or the sale of foreign property is involved.

Key Tax Considerations for Foreign Real Estate Owners:

🏠 Foreign Property & FBAR

U.S. taxpayers are not required to report the foreign property itself on the FBAR (Foreign Bank Account Report). However, if foreign bank accounts used to purchase, maintain, or receive income from the property exceed $10,000 at any time during the year, they must be disclosed using FinCEN Form 114.

💰 Reporting Rental Income

All rental income from overseas properties must be reported on Schedule E of the U.S. tax return. Taxpayers may deduct eligible expenses, including:

• Property taxes
• Mortgage interest
• Repairs and maintenance
• Depreciation
• Management or service fees

🌍 Use of the Foreign Tax Credit (FTC)

If rental income is taxed in the country where the property is located, U.S. expats may qualify for the Foreign Tax Credit (Form 1116) to offset U.S. tax liability, helping avoid double taxation.

🧾 Reporting Gains on Property Sales

When selling foreign real estate, any capital gains must be reported to the IRS, even if no tax is owed locally. U.S. citizens may benefit from the Primary Residence Exclusion if they’ve lived in the property for two out of the last five years, potentially excluding up to $250,000 in gains ($500,000 for joint filers).

“Foreign real estate can be a valuable investment,” says Diane Siriani for Expatriate Tax Returns, “but U.S. tax law doesn’t stop at the border. Understanding your obligations is key to avoiding penalties and maximizing deductions.”

For personalized assistance with foreign property tax reporting, contact Expatriate Tax Returns at (561) 715-0630 or visit www.expatriatetaxreturns.com.

About Expatriate Tax Returns

The firm, proudly woman-owned by Diane Siriani, a CPA, along with her team of experienced tax accountants, has been at the forefront of the profession for over 30 years, utilizing the best industry technologies to serve clients effectively and efficiently. Thanks to the flexibility offered by the internet, we have been able to service US citizens located anywhere in the world…quickly, efficiently and professionally.