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Rental Income

Taxation of rental income in the United States can be complex and time sensitive especially when the rental property is owned by a foreign investor or a U.S. Company owned by a non-resident owner.

Income from real property located in the United States that is owned by a nonresident alien is taxed at a 30% rate of the GROSS RENTAL INCOME. Rental expenses are not deductible.

unless the owner makes a special election in the first year of the rental income

A special election can be made in the first year of the rental income to treat the income as a business-like income, which allows deduction of all rental expenses associated with rental income. This results in the more favored tax rate of the NET RENTAL INCOME.