Commercial rental property is depreciated over a period of 39 years. If this property is a foreign rental property, then it will be depreciated over a 40-year period.

Are buildings depreciated over 39 years?

Commercial and residential building assets can be depreciated either over 39-year straight-line for commercial property, or a 27.5-year straight line for residential property as dictated by the current U.S. Tax Code.

How is overseas rental income taxed?

As a general rule, a non-US person who rents out his or her US home is subject to a 30% withholding tax imposed on the gross amount of each rental payment.

What happens when you sell your overseas property?

Instead it must be carried forward for set off against future profits of the overseas property rental business. The property rental business will normally cease when the last property is sold. Special rules apply to tax receipts and provide relief for expenses after cessation.

Can a loss on overseas property be carried forward?

The loss from the overseas property business cannot be set against the profit from the UK property business for the same year. Instead it must be carried forward for set off against future profits of the overseas property rental business. The property rental business will normally cease when the last property is sold.

Do you have to depreciate a rental property abroad?

While rental property ownership abroad can be a profitable investment, foreign rental property depreciation and IRS income guidelines can also be tricky to decipher on your own. Following IRS guidelines is an important matter, and you need to get it right the first time. Don’t leave this up to chance, contact a tax professional today.

Is it profitable to own a foreign rental property?

Owning a foreign rental property can be a very profitable investment if appropriately conducted. Indeed, international and domestic rental properties are treated very similarly by the IRS. The tax principles and benefits of owning property abroad are very similar to the tax principles and benefits of American property.