Non-resident investors - rental income tax

[Sebastian Mau]

Q: If I get rental income from US properties as a non-resident, do I have to pay 30% taxes on it?

Hi all, 

I have seen a lot of questions around this topic and I did some research because I had a similar question. Hoping that this might be helpful to someone that also has this question. Rather than just asking, I thought I help out, since I am learning so much from this community.

I am currently a permanent resident in the US and planning to invest in rental properties. I am all set and ready to go but I wanted to find out the tax situation for the following: 

I am planning to move out of the US - to Germany - at some point and I might not have received citizenship till then. Now, I was wondering about the tax situation as a potential future non-resident investor. Looks like there are two options:

1. Don't file taxes in the US, then 30% of my rental income will be withheld by the IRS. That's it. Not a great deal.

2. File taxes - Report rental income on a 1040NR - the nice thing with this is that I can deduct all expenses, repairs and depreciation from it. A non-resident owner must also provide a form W-8ECI to the rental agent (property manager) and obtain a tax payer identification number. For my case, I keep my SSN even when I move. But if you have never had one, you need to apply by filing a W-7.

Well, that seems to be it. Seems very similar to if a US resident does this. I hope I am not missing anything here. 

If anyone reads this and disagrees (or knows better), please let me know. Paying those 30% would be a major blow to my REI plans in the US and I fear, would stop me from even getting started.