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1040nr Tax form, pen and calculator

Non Resident US Tax Preparation (1040NR)

All rental property owners who rent out their property for 14 days or more are required to file annual US Federal Tax Returns, (1040NR’s) regardless of whether they make a profit.

The 1040NR Returns are due for the year ending in December; the final deadline for filing is June 15th of the following year.

Expenses are offset against rental income and the list of allowable expenses include operating costs, utilities, Mortgage Interest, Real Estate Tax, Insurance, Management fees and travel costs for each owner listed on the Title deeds.

In addition, the property is depreciated over 27.5 years and the furniture between 5-15 years. As a result, most rental homeowners have no taxable income and losses are filed which carry forward indefinitely.

The resulting losses, subject to certain personal use limitations, can be used to offset any eventual Capital Gains Tax which might be due at the time of selling the property.

The filing of US Federal Tax Returns, therefore, has considerable benefit for the homeowner, whilst fulfilling statutory obligations at the same time. The 1040NR Returns normally result in a loss and ultimately save money by eliminating (or greatly reducing) the Capital Gains Tax, when the property is sold. At the time of sale, the Title Company, or Attorneys dealing with the sale, will withhold 10% of the sales price and without the filed Federal Tax Returns, Capital Gains Tax will be due to the IRS. (See FIRPTA /8288B, on our website)

(Our annual homeowner questionnaire is provided in order to record your income and expenditure. It can be downloaded from our website-as shown below).

We request completion and return of this form by end January/February, along with any supporting documentation. We do not require receipts or invoices etc. but do request copies of Annual Interest statements, both received and paid.

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At the end of the year, your management company will also send form 1042S to the IRS, confirming the amount of rental income you received during that year. (A copy of the 1042S will also be sent to you, the homeowner) If you wish to avoid tax withholding on your rental income of 30%, you must provide your management company with W8-ECI form.

This must include your US Tax ID (or ITIN), which will exempt you from Withholding. When you engage our services, we immediately apply for the US tax ID on your behalf - See Members' Only Page.

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