French income tax on rental property

[jezza95]

Hi,

French citizen, moved to US some time ago, under green card now.

All my incomes are in US, but I also rent the 2 houses I own in France. So I pay income taxes in France on the rents I receive.

-> Shall I declare it has a Foreign tax credit? In such case what should I provide as gross income in the 1116 (I have already declared my rental incomes in schedule 1 and E, so putting the gross income in the 1116 is doubling these incomes)?

-> Or shall I just add these income taxes to the "other taxes paid" in turbo tax which is going to line 16 on my schedule E? Meaning that line 16 of the schedule E will contain the real estate taxes + income taxes on rents I paid in France. And the amount I shall put into these "other taxes paid" boxes will be a Pro-Rata of the income I received for each house.

Many thanks

[pk]

@jezza95 , if the  taxes paid to France is based on  rental income ( and not just renting a place  or on square footage or some flat fee ) then it need to be treated as income tax i.e. it qualifies for   foreign tax credit / deduction.  You will then have to tel Turbotax that he rental income is foreign -- while filling form 1116 , it should ask you for the amount of foreign income.

If on the other hand  this is not based on rental income ( gross or otherwise ), then you should deduct it on Schedule-E as other taxes paid or property taxes paid , whichever is applicable.

A second point to note  is that you need to tell  TurboTax that the rental property is foreign so that depreciation is done   correctly  ( there is  a difference, depending on when you first started renting  for US tax purposes ).

A third point to note that , if this income is going through a local bank i.e. you  either own or have signature authority   over , you may be subject to FBAR  and/or FATCA rules.

Do you need more on this ?

[jezza95]

@pk, Thank you for your prompt reply.

Clearly understand that it qualifies for foreign tax credit/deduction.

Now, working on this option; when TurboTax ask me if "I have already reported all your foreign income and if applicable, foreign taxes paid on interest, dividends or Schedules K-1"? my answer is YES since all my rental incomes are described in the Wages&Income tab under Rental Properties and Royalties. Is it correct?

When I am asked for the Income type, I selected, Passive income. Is it correct?

Then if I do not put anything in the Other Gross Income windows, then I do not get any tax credit. While if I add the Gross Income I declared in France, then I get the tax credit. What should I do because if I add the Gross Income declared in France then this is stacked on top of my global Wages and Income?

Thank you

[leogrim]

Hey there, did you ever figure this out by any chance? I'm in the exact same situation and wondering what to do..

[pk]

@leogrim , this is very old thread and perhaps you would consider  either (a) start a new thread describing your exact situation OR (b) at least describe here your situation --- I would prefer option (a)  but if you prefer (b) that will also work.  I will circle back later  once you have answered

pk

[jezza95]

Yes I did it with the help of Turbotax support team.

Basically you'll have to declare your rental income as if the property was in US (schedule E). And then claim for a deduction regarding the taxes you already paid in France (1116).

Of course it would be better if you provide me some specifics so that I can help you