Did I miss any rental income reporting requirements?

[mspl15]

It's the opposite situation of another thread here. The house in my country had been bought by my parents 10 years ago, but they had gifted it to me before I became a Tax Resident, so there shouldn't be any 3520 reporting. I had authorized my parents back home the rights to the gifted property before I went to the US, also while I was a Tax Nonresident. This is for legitimate reason, as I could not directly manage the properties while I am away.

Fast forward, I have a green card now. Ever since my authorization, they have been collecting rent/pay expenses & taxes in the home country and take everything that remains for them - I have received no income/paid no expenses. Did I/they miss any US income reporting requirements?

[Carl]

Are you claiming "anything" for the property on your U.S. tax return? I ask, because even though it's foreign property, at a minimum you can claim property taxes and mortgage interest. If it's a rental, then you can also claim the cost of property insurance along with other rental expenses.

If you have not been claiming anything at any time on your U.S. tax return for this property, and have not received any financial benefit either directly or indirectly from the property, then I see no problem. But.... (yes, there's always a but)

Depending on the legalities of how you "gifted your parents the rights", this creates a bit of ambiguity.

In the U.S. this is referred to as a Ladybird Deed, and you can read about that to see what I'm referring to at https://www.deedclaim.com/lady-bird-deed/  I don't know if or how that would apply in your situation since there's the complexity of foreign property that was foreign owned being transferred to a green card holder legally residing in the U.S.

Even if someone else in this public forum can provide us insight to this, I would still highly suggest you seek the services of a tax professional well versed in foreign property transfers. Especially if your resident U.S. state also taxes personal income. Even so, I hope others will jump in here and be able to include IRS pubs or statutes in their responses. This is not a scenario we see all that much in this public forum.

[mspl15]

I claimed nothing on my tax return, so no expenses or income.

When I give my parents right, they can live in it, find a tenant and rent it out, repair it or even sell it outright. They have the right to receive the income for their own take too, not like they receive the income for me.

This is a very common practice for people from my country that later immigrates to the US. I don't think mine sounds like the Lady Bird deed you referenced at all. But I will check with an attorney/CPA for sure!

[Carl]

This is a very common practice for people from my country that later immigrates to the US.

I understand what you're saying. But U.S. tax laws don't deal with the common practices of other countries.

I don't think mine sounds like the Lady Bird deed

That was just a wild guess on my part, as to how I would think the IRS might see it, based on the limited information initially provided in your first post, and one heck of a lot of unsubstantiated assumptions on my part.

But I will check with an attorney/CPA for sure!

That's overall your best bet over a public user to user forum such as this one, when dealing with things that may have the potential to come back and bite you later down the road.

[tagteam]

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@Carl wrote:

I don't think mine sounds like the Lady Bird deed

That was just a wild guess on my part, as to how I would think the IRS might see it....

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There is no possible way the IRS would see this scenario as a Lady Bird deed since (a) Lady Bird deeds are only permitted in a few states (the overwhelming majority do not allow them and, (b) an actual deed was never drafted and signed.

Regardless, @mspl15 does need to consult with an attorney or tax professional who is knowledgeable and has experience in dealing with the tax laws of @mspl15's home country.