pk
Level 15
Level 15

Investors & landlords

@patamelia , sorry perhaps my reply was not specific enough.  What I am talking about here is this :

(a) since you filed 2018 return with foreign rental income and expenses on form 1116, you need to correct that i.e.  amend 2018 to show your rental income/expenses on Schedule-E  ( note that your depreciation for the foreign property needs to follow "foreign residential rental property " rules current for 2018 start of renting ).  This also means  that while net rental income/loss is subject to Passive Activity Loss Limitation for US purposes, this doe not flow to  form 1116.   It also means  that the net foreign income  as used by the foreign taxing authority ( which country please  ) can now be treated as foreign income and any income taxes on that income is eligible for foreign tax credit.  Thus doing this amendment you have the return as per current tax laws

(b) once this 2018 is done then you can have the foreign tax credits for this passive category can be used for 2019 and beyond -- note  that unused foreign credits by category can be taken back one year and forward for 10 years ( the catch is you must have foreign income to use this ).  The other way is to use this as deduction when you itemize.

 

Does this help or am I still in the left field , as far your case is concerned ?