Taxation of Irish investment property in the US

[Adrian_B]

Hi,

Does anyone have any experience renting out a small residential property in Ireland that you have to pay tax on in the US (either because you're an American citizen or a permanent resident there) and how it works from the US perspective? I'm guessing there must be a double-taxation agreement with Ireland so that you don't get taxed twice on your rental income but ust wondering if anyone can give me more details. I know all about the Irish treatment, I only need to know the American tax perspective on income from Irish residential investment properties. Thank you.

 

[Larry Lain]

I imagine you'd just include the rental income/expenses in Sch E on your 1040. The taxes you pay in Ireland would be included in the FTC (foreign tax credit) Form 1116. If you're paying mortgage interest you can deduct that (up to a million USD I think). I live in the US and report foreign income (mostly dividends) in my US returns. Some of that is from Israel where the Israeli gov takes 25% before I get it. That 25% is deductible against my US capital gains.
The downside of US. tax returns is the sheer amount of forms to fill and how to know if you're doing it right given tax laws change every year. Therefore you have to hire a CPA which adds a fair amount of expense.