Tax Report question...

[royl66]

I own a condo in my home country overseas that is being rented out. Since I live in the US, my parents over there handle my tenants and all issues with the lease agreement. They keep the proceeds from the rent to themselves, so basically I don't have any income from that condo and don't report nothing on my US tax returns here.

Recently my parents suggested to pass the proceeds to me. Would I now have to start declaring that (foreign) income on my tax returns? I should add that that income is not taxed in my home country as it is below the threshhold over there. Do I still have to include it in my report here? Would it matter if I kept the money overseas or have it transfered over here on a monthly or a yearly basis??

Thanks!

 

[baikal3]

I own a condo in my home country overseas that is being rented out. Since I live in the US, my parents over there handle my tenants and all issues with the lease agreement. They keep the proceeds from the rent to themselves, so basically I don't have any income from that condo and don't report nothing on my US tax returns here.

Recently my parents suggested to pass the proceeds to me. Would I now have to start declaring that (foreign) income on my tax returns? I should add that that income is not taxed in my home country as it is below the threshhold over there. Do I still have to include it in my report here? Would it matter if I kept the money overseas or have it transfered over here on a monthly or a yearly basis??

Thanks!

For U.S. residents, all their worldwide income is taxable in the U.S. and must be reported on the federal income tax return; it does not matter if the foreign source income is paid in the U.S. or foreign bank account, and it does not matter in which manner the payments are made - it is still subject to the U.S. income tax.

Sometimes tax treaties between the U.S. and other countries that may exempt certain kinds of foreign source income from U.S. taxes. You should check IRS Publication 901 to see if there is such a treaty with your home country and if yes, what its provisions are. See
http://www.irs.gov/pub/irs-pdf/p901.pdf

 

[Jackolantern]

Recently my parents suggested to pass the proceeds to me. Would I now have to start declaring that (foreign) income on my tax returns? I should add that that income is not taxed in my home country as it is below the threshhold over there. Do I still have to include it in my report here?

Yes, if they're passing on the proceeds to you (even if it's into a foreign bank account), you'll have to declare the income on your US tax return.

Note that once the property becomes a source of taxable income, you'll also be able to deduct some or all of the expenses involved with maintaining it -- insurance, repairs, local taxes, possibly even mortgage interest. But you can't double-deduct; if you're charging $1000/month for rent, and then your parents use $300/month for maintaining the place and give $700 to you, you'll need to declare the $1000 gross and then deduct $300, not deduct $300 from your $700 net.

But this is not a tax forum -- consult a tax professional who knows about how to handle income from a non-US rental property.