Form 8858? Do you need to file if you directly own a foreign rental property?

[oboero2]

Do I need to file form 8858 if I directly own a foreign rental property?

Instruction says anyone who owns either Foreign Disregarded Entities (FDEs) or Foreign Branches (FBs) are required to file, but what if I just directly own a foreign rental property?

I heard that IRS recently expanded filing requirement for form 8858, which makes it even more confusing.

Is there any penalty for not filing in this case?

Any help is appreciated, thank you.

[tagteam]

I don't believe you have to file that form since it is basically for owners of an FDE or who operate an FB (and I don't believe rental real estate would be so considered). 

Regardless, I will page Champ @pk for input.

[pk]

@oboero2 ,  Is your rental / income property owned directly by you OR  is  it through some kind of entity  ( LLC, Partnership, corp etc. etc. ) ?  

If the latter  and  not  a self-standing entity then it may be  Dis-regarded entity, in which case , yes you would need to file form 8858.

If on the other hand you are the owner of the  income property , then if you use the services  of an agent  or a management company , the incomes and expenses  are reported on Schedule-E.  You do not need the form 8858.  Please share more info on the exact nature of your  foreign  income asset --please .

I don't know of  any specific penalty for not filing a form when required to other than  that for  " failure to file a return"

[oboero2]

Thank you for your reply.

I directly own the foreign rental property.

I don't have a foreign bank account so I pay foreign management company service fees to manage and collect the rental income on my behalf. The foreign management company then sends the rental income to my US bank account.

I have heard about the recent changes in 2018 that expanded the filing requirement for 8858, by making just "owing a foreign rental property" count towards owing a "Foreign Branches," but I wasn't sure.

[pk]

@oboero2 , see this   -- instruction for form 8858 -- page 1  " Who Must File"

-->  Instructions for Form 8858 (Rev. December 2023) (irs.gov)

Hope this  clarifies the situation.

Namaste ji

[oboero2]

Thanks for the link, I have actually already read this many times and still confused. What is your interpretation?