An encore presentation with Live Q&A.
A 110-minute CPE webinar with interactive Q&A
This course will discuss the considerations and caveats of U.S. residents owning foreign rental property. Our seasoned panel of international tax experts will explore U.S. and foreign holding structures, residential and nonresidential rentals, and properly reporting rental income and expenses with a focus on reducing a taxpayer's overall tax burden.
Description
Many Americans work or live outside the U.S. and purchase vacation homes and residential or commercial rental property while abroad. The property's use, its ownership structure, the owner's filing status, and foreign tax credits all affect the owner's tax obligation.
Personal use of rental property evokes different tax rules than properties operated exclusively for business. Complicating the tax determination are the U.S. vacation home rules. Renting the property for more or less than 14 days and the percentage the property is used personally affect the related expenses' deductibility.
For all rental properties, tax advisers must consider the host country's tax implications and those of the U.S. The rental and sale gain or loss must be properly reported in both countries, often resulting in double taxation. International tax advisers must understand the relief provided under U.S. income tax treaties and foreign tax credits to mitigate this result. Equally important is properly reporting losses in years leading up to the disposition to preserve these deductions.
Although the 2017 tax reform eliminated the deduction for foreign real estate taxes, primary residences located overseas can qualify for the Section 121 exclusion of gains up to $250,000 if single and $500,000 if married by meeting the two out of five-year residency test. Understanding the deductions available and reporting requirements for foreign-owned real estate is critical for tax professionals working with international taxpayers.
Listen as our panel of international tax experts explains the U.S. income tax and other reporting obligations, key considerations when purchasing property abroad, and tips to minimize double and overall taxation in both countries.
Outline
- Ownership structures
- U.S.
- Foreign
- Other considerations of owning foreign property
- Types of property
- Residential
- Commercial
- Vacation homes
- Rental income
- Sales
- Double taxation relief
- Tax treaties
- Foreign tax credits
- Foreign currency conversion
- Other reporting requirements
Benefits
The panel will review these and other critical issues:
- How is foreign currency converted to U.S. dollars when reporting income and expenses?
- What are the income tax issues related to selling foreign-owned property?
- What rental expenses are deductible to lower a taxpayer's U.S. income tax obligation?
- Using U.S. and typical foreign entities for acquiring and holding foreign real property
- What are the U.S. reporting obligations for foreign-owned real estate?
An encore presentation featuring Live Q&A.
FACULTY
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C. Edward (Ed) Kennedy, Jr., CPA, JD
Managing Director
C Edward Kennedy Jr
Mr. Kennedy has more than 42 years of experience dealing with a variety of international tax matters, specializing in tax consulting services to a wide variety of clients ranging from closely held companies to multi-national businesses. His expertise includes domestic and foreign income and social security tax planning, tax compliance for individuals and corporations, tax treatment of incentive compensation plans, international assignment program administration, and international assignment policy design. Mr. Kennedy has also served as the U.S. practice leader for international social security matters for a Big 4 accounting firm. He is a frequent speaker in the areas of international tax compliance and reporting obligations U.S. information reporting requirements for foreign assets and foreign entities, U.S. tax implications of foreign pension and social security plans, and U.S. income and social tax treaty planning. Mr. Kennedy is a member of the Texas Bar and is licensed as a certified accountant in Georgia and Texas. He has a B.A. from Furman University and a J.D. from Vanderbilt University School of Law.
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Patrick J. McCormick, J.D., LL.M.
Founder/Managing Partner
McCormick Tax
Mr. McCormick specializes in the areas of international taxation, tax compliance, and offshore reporting obligations. He published national articles and given numerous national and local presentations on assorted areas of tax and estate planning law, including international tax and offshore compliance issues. His latest article on PFICs is titled Tax Reporting Implications of Foreign Mutual Funds. He is licensed to practice in the States of New Jersey, Florida, and Georgia, and the Commonwealth of Pennsylvania.
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