@Taylor2025 , having read through your post and refreshing my memory of US-PRC Tax Treaty, I would say the following:
(a) under article 6, Chine where the property is located has a right ( not exclusive ) to tax the income from letting the asset.
(b) article 22 shows the mechanism to be used by each contracting state to ameliorate the effects of double taxation. US in particular does recognize the total; amount of taxes paid to another contracting state on income taxed by both countries. But the rub is how US does it.
(c) The foreign tax credit ( form 1116 ), while recognizing dollar for dollar foreign taxes paid or levied, limits the allowable amount for the tax year based on essentially a ratio of foreign income to World income.. The rest being available for carry back or carry forward but again limited by the ratio mentioned above.
(d) Or one can take a deduction of the full amount of foreign taxes paid when one itemizes and but again limited by State and Local Taxes ( SALT ) limitation of US$10,000.
(e) On US taxes on Schedule-E income ( Supplementary income such as rental income ), and recognizing rental income, allowed expenses , property taxes, dues, legal fees etc. and depreciation etc. one ends up with an amount of income that is taxed as ordinary income ( marginal rate ). That is part of the total taxes due for Federal purposes. This is reduced by Foreign Tax Credit allowable for the year.
I don't have direct knowledge of whether China allows depreciation of asset but in my experience ( unless the world income pushes one into very high . bracket ) generally US federal taxes are reasonable
I hope I have answered your query as completely I can . If there is more I can do , please feel welcome to add to this thread.
pk
