US Non-Resident Tax Compliance
US Income Tax Return
All property owners, residing offshore, who receive income from their rental homes, where I.R.S. withholding has not been applied, must file a U.S. income tax return. The U.S. tax year runs January to December and returns are due by June 15th annually. Expenses are offset against the rental income and any losses carried forward year on year until the eventual sale of the property when losses may be used to minimize any capital gain on the property. Deductions include advertising, cleaning & maintenance, commissions, insurance, accounting & legal fees, management fees, mortgage interest, repairs & supplies, property and tangible personal property taxes, utilities, flights and car hire.
Individual Taxpayer Identification Number (I.T.I.N.)
All owners of U.S. rental property, not resident in the U.S., must have an I.T.I.N.
Tangible Personal Property Tax Return
Tangible Personal Property Tax is an ad-valorem tax assessed against the furniture, fixtures and equipment located in businesses and rental property. Tax returns must be filed to the Property Appraisers’ office by April 1st of each year. Tax billing follows processing of the tax return by the county and is sent out on November 1st each year with payment due by March 31st.
Sales and Tourist Development Tax
Sales and Tourist Development Tax is payable on rental income received. Your management company will usually collect and report all sales and tourist development tax on the rentals that they handle. However, if you rent and receive income directly you will need to register for, collect and report sales and tourist development tax on this income either through your management company or direct with the relevant authorities.
Local Business Tax (previously Occupational License)
Required by homeowners who rent their U.S. property. Paid annually to the Tax Collectors Office (in the County where the rental property is located).
Property / Real Estate Tax
Property or Real Estate taxes are payable annually. The Property Appraiser’s Office establishes the assessed value of a property and prepares the tax roll. Tax notices are served to the owner’s last record of address or, where the property owner pays through an escrow account and their mortgage company has requested to be sent the tax bill, the owner will receive a copy of the notice. Tax statements are normally mailed out on or before November 1st each year.
10% F.I.R.P.T.A. Withholding Tax
US tax law requires that a non-resident alien who sells an interest in their US real property is subject to withholding, for tax purposes, of 10% of the gross sales price. The closing agent is required, by law to forward this money to the IRS – irrespective of any capital gain or loss on the property. In the majority of cases this can be prevented by filing an application for a withholding certificate to the IRS, The application calculates the actual tax owed, if any, on the sale of the property and the cleared funds released back to the seller.
Capital gains tax will be payable on the net gain from the sale of your property. Tax rates vary depending on the amount and type of gain and length of time that you have held the property.
Provided Courtesy of Eccleston International Tax
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Listing information last updated on September 20th, 2017 at 11:18pm EDT.