@IronWomen
(a) How did you file 2023 return --- MFJ / MFS/?
(b) Which country is your tax-home now ? Is this the same country your NRA spouse is a citizen of ?
1- Do we need to continue file ITR as married filling jointly as we co-own the property? My understanding is that my spouse doesn't need to file taxes in USA being a non-resident of USA and has no USA income.
Ans: As a US citizen you are required to file US Federal Return and taxed on your world income. If you choose to file as MFJ, you and spouse will have to request that spouse be treated as a "Resident for tax purposes", expose her world income to US taxes. However, at that point you both can use Foreign Earned Income Exclusion or Foreign Tax credit to reduce double taxation burden. Also any tax treaty between US and your taxhome country may affect things.
2- How much taxes are we liable to pay on the rental income?
Ans: For US tax purposes, rental income is reported on Schedule-E, allows expenses (such as property taxes, mortgage interest, repairs/maintenance etc. etc. ) and depreciation to used as a deduction. Please see this Pub from the IRS --- > 2024 Publication 527
3- We have mortgage on this property that we are planning to close by pre-paying. Is it advisable to keep the mortgage or close it for the benefit of ITR? Is there a deduction on mortgage that we can show by keeping it such that it can lower our taxes on the rental income?
Ans: Please see answers and refs. to your question 2 above. While mortgage interest is both an expense and a deduction against rental income, Only you can decide whether paying off the mortgage is of benefit to you or not. It is generally tax neutral
4- Is there a calculator that we can use to pre-calculate the taxes on our rental income after all the deductions?
Ans: You can always use TurboTax dowloaded version -- 2024 ( my favorite for such is Windows version of Home & Business --- this will also cover your complicated FEIE/ FTC etc. ) to compute what is likely to happen in 2025 filing -- you can use the What-if worksheet.
While I have answered your questions in general, please answer my questions above for a more specific reply. I will circle back once I hear from you -- yes ?
