Foreign real estate is not a foreign financial asset required to be reported on Form 8938. So, a personal residence or a rental property outside of the United States does not need to be reported on this form.
However, if the real estate is held through a foreign entity, such as a corporation, partnership, or trust, then your interest in the entity is a specified foreign financial asset that might be reportable on Form 8938. The value of the real estate held by the entity is used to determining the value of the shares to be reported on Form 8938, but the real estate itself is not separately reported on Form 8938.
Form 8938 – Statement of Foreign Financial Assets was created in 2011 and must be filed by anyone with significant assets outside of the United States. If you qualify to file Form 8938, you are to report financial accounts maintained by a foreign financial institution. Examples of financial accounts include: Savings, deposit, checking, and brokerage accounts held with a bank or broker-dealer.
Also, you are to report stock or securities issued by a foreign corporation (like the one that holds your foreign real estate), trust or other entity (such as an offshore LLC), and any financial instrument or contract held for investment with an issuer or counterparty that is not a U.S. person. Examples of these assets include:
- Stock or securities issued by a foreign corporation;
- Stock or membership interests issued by a foreign limited liability company;
- A note, bond or debenture issued by a foreign person;
- An interest rate swap, currency swap, basis swap, interest rate cap, interest rate floor, commodity swap, equity swap, equity index swap, credit default swap or similar agreement with a foreign counterparty;
- An option or other derivative instrument with respect to any of these examples or with respect to any currency or commodity that is entered into with a foreign counterparty or issuer;
- A partnership interest in a foreign partnership;
- An interest in a foreign retirement plan or deferred compensation plan;
- An interest in a foreign trust or estate;
- Any interest in a foreign-issued insurance contract or annuity with a cash-surrender value.
