Owning property abroad doesn’t mean you’re off the hook from U.S. tax obligations—but it may mean you’re eligible for valuable deductions. From mortgage interest to property taxes and repairs, Americans can claim a nu🔯mber of tax deductions on foreign real estate, depending on how the property is used.

This guide outline𓃲s the most common types of deductions available under U.S. tax lওaw and the forms you’ll need to file them.

What 𝐆Are the Allow📖able Tax Deductions on Foreign Real Estate?

How you use your foreign property has an impact on the 澳洲幸运5官方开奖结果体彩网:tax deductions you can claim. ꧒The two broad categories are using the pꦦroperty as a residence or as a rental property. It's important to collect detailed and accurate information depending on how you use this property to help maximize your tax deductions on your U.S. tax forms.

Foreign Property for Personal Use

If you use the property as a residence, you can deduct mortgage interest on up to $750,000 of mortgage debt on the 澳洲幸运5官方开奖结果体彩网:Schedule A tax form. If you are married and filing separately, each person can deduct up to $375,000. Keep in mind, this applies to the total mortgage debt of your first and second home. It is also possible to deduct 澳洲幸运5官方开奖结果体彩网:mortgage interest points on the property, similar to the rules for owning a second home i꧂n the U.S.

For properties purchased before December 6, 2017, mortgage interest can be deducted to up to $1 million in mortgage debt. This cap is set to return ba♊ck to this level in 2026, u🐟nless it is blocked in Congress, so keep this in mind looking ahead in future tax reporting.

Along with mortgage interest deductions, you can claim 澳洲幸运5官方开奖结果体彩网:home office deductions if you are eligible. This enables you to deduct maintenance, utilities, and insurance costs if you are self-employed and operate your business out of this property.

It’s also worth noting that foreign property tax deductions are no longer eligible as of 2018 if the property is used as a residence (however they can be deducted if used as a rental property).

Foreign Rental Property

If you use foreign real estate as a rental property, you can lower your tax liability by claiming a number of deductions, however, it's important to split these expenses if it is also used for personal use. Rental property expenses are reported on Schedule E of 澳洲幸运5官方开奖结果体彩网:IRS Form 1040.

The following expenses are eligible for deductions on foreign rental properties:

• Mortgage interest
• Foreign property taxes
• Maintenance and repairs
• Insurance
• Utilities
• Travel
• Landscaping and cleaning expenses
• Depreciation

Foreign properties are depreciated over 30 years, versus 27.5 years for domestic properties. Here, depreciation expenses apply only to the building given wear and tear over its lifetime. It does not apply to the land, which is never depreciated.

In addition, you may be able to avoid 澳洲幸运5官方开奖结果体彩网:double taxation if you pay taxes in the foreign country. To do so, you can claim a foreign tax credit on your U.S. tax return based on taxes paid on your rental income in this country, helping to offset taxes owed in the U.S.

The Bottom Line

Under U.S. tax law, you are required to report income on foreign real estate, but rules differ depending on the nature of ownership. To help🐼 maximize deductions on this in💝come, you can report expenses such as mortgage interest, foreign property taxes, depreciation, and claim foreign tax credits when applicable.

Because these rules can be complex, it’s a good idea to work with a 澳洲幸运5官方开奖结果体彩网:tax professional or real estate attorney to help you stay compliant and maximize your deductions.