§ 8.8 Residential Property

• Library: Rights of Foreign Nationals (OSBar) (2020 Ed.)

§ 8.8 RESIDENTIAL PROPERTY

§ 8.8-1 Renting Out a Home

If an individual retains ownership of a foreign home and rents it out, all income and reasonable expenses for the rental must be separately reported on IRS Schedule E (Supplemental Income and Loss). See IRS Publ'n 527 (Residential Rental Property) (2019). If the home is a vacation rental, separate rules apply depending on whether it is rented for more than 14 days during the year or used for personal use more than 14 days or more than 10 percent of the rented days. IRC § 280A; IRS Publ'n 527 at 17-19.

In addition, a taxpayer is typically allowed a noncash depreciation deduction against the rental income for the building, improvements, furniture, and appliances in the rental. No depreciation is claimed for the portion allocated to land; however, it is still part of the cost basis used to calculate any gain when the property is sold. IRS Publ'n 527 at 5-12.

A U.S. residential building is typically depreciated over a 27.5-year life, but for a...