Listed below are the primary taxation and compliance issues of which a non-resident owner of U.S. rental property should be aware.
Please note: the information and filing deadlines provided below for Tangible Personal Property Tax, Property or Real Estate Tax, Hotel License and Local Business Tax are specific to the State of Florida. Please contact our office for information relating to the State where your property is located.
All property owners residing offshore who receive income from their rental homes, where IRS withholding has not been applied, must file a US Income Tax Return. The US tax year runs January to December and returns are due by June 15th annually. Expenses are offset against the rental income and any relevant losses carried forward year on year until the eventual sale of the property when losses may be used to minimise any capital gain on the property. Please visit our website for information on personal use of your US property, allocation of expenses, “passive activity loss” and “vacation home loss”. More info
Tangible Personal Property Tax
Tangible Personal Property Tax is an ad valorem tax assessed against the furniture, fixtures and equipment located in businesses and rental property. Tax returns must be filed to the Property Appraisers’ office by April 1st. Tax billing follows processing of the tax return by the county and is sent out on November 1st each year with payment due by March 31st. A $25,000 exemption applies in Florida, effective January 1st, 2008. More info
Property or Real Estate Taxes
Property or Real Estate Taxes are payable annually. The Property Appraiser’s Office establishes the assessed value of a property and prepares the tax roll. Tax notices are served to the owner’s last record of address or, where the property owner pays through an escrow account and their mortgage company has requested to be sent the tax bill, the owner will receive a copy of the notice. Tax statements are normally mailed out on or before November 1st each year. More info
Sales & Use Tax and Tourist Development Tax
If you rent your property for periods of less than six months you will be required to collect and pay Sales & Use Tax and Tourist Development Tax on rental income received. Your management company will usually collect and report all sales and tourist development tax on the rentals that they handle. However, if you receive rental income in your home country you will need to collect and report sales and tourist development tax on this income either through your management company or direct with the relevant authorities. If you choose to deal directly, you can make application to the State and County to set up these accounts, alternatively we will prepare and file submissions on your behalf to set up your accounts and assist with the initial filings. More info on Sales & Use Tax | More info on Tourist Development Tax
Bureau of Economic Analysis
All foreign investments in US business enterprises in which a foreign person owns a ten-percent-or-more interest are subject to reporting, including all ownership of real estate, improved and unimproved.
Local Business Tax (previously Occupational License)
Required by homeowners who rent their US property. Renewed annually to the Tax Collectors Office (in the County where the rental property is located). The application for this license is usually handled by your managing agent but you may also be required to file if you intend renting your property directly. More info
If you rent your property for periods of less than six months you are required to display a Florida Hotel License. The application and renewal of this license is usually handled by your management company but we recommend that you keep a copy in your files. More info
Individual Taxpayer Identification Number (ITIN) & Employer Identification Number (EIN)
All owners of US rental property, not resident in the US, must have an ITIN or, in the case of entities, an EIN. More info
This “Certificate of Foreign Person’s Claim for Exemption from Withholding on Income Effectively Connected with the Conduct of a Trade or Business in the United States” is required by your management company. Without this form in their files, they are required by U.S. federal law to withhold 30% of your rental income and pay that amount to the IRS. More info
Whilst some of the above items will be serviced by your management company; the preparation and filing of US Income Tax Return(s) to the IRS, Tangible Personal Property Tax Return(s) to the County and filings to the Bureau of Economic Analysis are usually handled by your US accountant.