Overseas living and managing rentals FEIE

[Judd Campbell]

Been gone a long time from the forums, 

Hoping someone with tax expertise could help me here.  

My wife and I have 16 rental units in Kentucky and although we have an on the ground handyman we mange financial things remotely.  

We are living in Phuket Thailand currently and this year I utilized the Foreign Earned Income Exclusion to not pay taxes on the first 120k of income.  any income over that which is a combination of W2 and rental income is subject to taxes starting at zero.  so this eliminates taxes on the TOP end of income.  (if I made $200k I would be taxes on 80k after taking the standard deduction and child tax credits, etc.  no AMT or anything.  

Also, I have a 10 year visa for Thailand which excludes me from paying any taxes on income or wealth here in Thailand.  so no local taxes. 

The question is, my wife and I are both able to take the FEIE if we are both working.  My W2 income takes all my FEIE, can I have our rental property business expense her management at $100k?  this would have the rentals break even on my income, and her 100k of income would be untaxed under the FEIE.  

is this possible?  She and I jointly own about 10 units while the rest are under my name.  No leverage, not much in the way of repairs as they are all rehabbed with long term tenants.  Low cost basis so the depreciation is not high. 

[Bill Hampton]

@Judd Campbell

The rentals are located in the US, so the income is not considered foreign income. Managing the rentals from Thailand does not make it foreign income. 

[Judd Campbell]

Quote from @Bill Hampton:

@Judd Campbell

The rentals are located in the US, so the income is not considered foreign income. Managing the rentals from Thailand does not make it foreign income. 

 correct, it is not foreign income.  My wife working to manage the rentals is foreign earned income for her.  My Rental Schedule E would show rental income, expenses such as tax, insurance, repairs, etc and property management.  if my wife is paid 30% of collected rents to manage the property it will reduce my Schedule E profit. This would be a pretax payout to my wife.  because she declares income while being overseas, she can exclude the first 120k from federal taxes.  

I am paid by a US company within a US bank account.  we are physically overseas more than 330 days so we can use the FEIE.  confirmed by Deloitte and Ernst & Young as they have been doing my taxes. 

[Henry Clark]

Ask the cpa Firm.  You would

Probably then need to pay Self Employment tax.  

[James Wilcox]

Quote from @Judd Campbell:

Been gone a long time from the forums, 

Hoping someone with tax expertise could help me here.  

My wife and I have 16 rental units in Kentucky and although we have an on the ground handyman we mange financial things remotely.  

We are living in Phuket Thailand currently and this year I utilized the Foreign Earned Income Exclusion to not pay taxes on the first 120k of income.  any income over that which is a combination of W2 and rental income is subject to taxes starting at zero.  so this eliminates taxes on the TOP end of income.  (if I made $200k I would be taxes on 80k after taking the standard deduction and child tax credits, etc.  no AMT or anything.  

Also, I have a 10 year visa for Thailand which excludes me from paying any taxes on income or wealth here in Thailand.  so no local taxes. 

The question is, my wife and I are both able to take the FEIE if we are both working.  My W2 income takes all my FEIE, can I have our rental property business expense her management at $100k?  this would have the rentals break even on my income, and her 100k of income would be untaxed under the FEIE.  

is this possible?  She and I jointly own about 10 units while the rest are under my name.  No leverage, not much in the way of repairs as they are all rehabbed with long term tenants.  Low cost basis so the depreciation is not high. 

I don’t have much to offer on that front, but I just wanted to say hi to the famous @Judd Campbell! If you ever decide to list those properties for sale on the open market, you know who to call. I got some really great investor programs. ;)

[Account Closed]

Quote from @Judd Campbell:

Been gone a long time from the forums, 

Hoping someone with tax expertise could help me here.  

My wife and I have 16 rental units in Kentucky and although we have an on the ground handyman we mange financial things remotely.  

We are living in Phuket Thailand currently and this year I utilized the Foreign Earned Income Exclusion to not pay taxes on the first 120k of income.  any income over that which is a combination of W2 and rental income is subject to taxes starting at zero.  so this eliminates taxes on the TOP end of income.  (if I made $200k I would be taxes on 80k after taking the standard deduction and child tax credits, etc.  no AMT or anything.  

Also, I have a 10 year visa for Thailand which excludes me from paying any taxes on income or wealth here in Thailand.  so no local taxes. 

The question is, my wife and I are both able to take the FEIE if we are both working.  My W2 income takes all my FEIE, can I have our rental property business expense her management at $100k?  this would have the rentals break even on my income, and her 100k of income would be untaxed under the FEIE.  

is this possible?  She and I jointly own about 10 units while the rest are under my name.  No leverage, not much in the way of repairs as they are all rehabbed with long term tenants.  Low cost basis so the depreciation is not high. 

 Hey Judd, 

There are scenarios where paying your wife under the management company would make sense. Not very helpful as a post but the right thing to do here is share your entire situation with an accountant. 

Just a note for you since I was just talking to a client about this: 

if you live in a high-income state or have privacy concerns and are living the digital nomad lifestyle, south Dakota has an interesting residency status program that can potentially save you guys 10s of thousands on income tax and have great anonymity. 

[Judd Campbell]

Quote from @James Wilcox:

Quote from @Judd Campbell:

Been gone a long time from the forums, 

Hoping someone with tax expertise could help me here.  

My wife and I have 16 rental units in Kentucky and although we have an on the ground handyman we mange financial things remotely.  

We are living in Phuket Thailand currently and this year I utilized the Foreign Earned Income Exclusion to not pay taxes on the first 120k of income.  any income over that which is a combination of W2 and rental income is subject to taxes starting at zero.  so this eliminates taxes on the TOP end of income.  (if I made $200k I would be taxes on 80k after taking the standard deduction and child tax credits, etc.  no AMT or anything.  

Also, I have a 10 year visa for Thailand which excludes me from paying any taxes on income or wealth here in Thailand.  so no local taxes. 

The question is, my wife and I are both able to take the FEIE if we are both working.  My W2 income takes all my FEIE, can I have our rental property business expense her management at $100k?  this would have the rentals break even on my income, and her 100k of income would be untaxed under the FEIE.  

is this possible?  She and I jointly own about 10 units while the rest are under my name.  No leverage, not much in the way of repairs as they are all rehabbed with long term tenants.  Low cost basis so the depreciation is not high. 

I don’t have much to offer on that front, but I just wanted to say hi to the famous @Judd Campbell! If you ever decide to list those properties for sale on the open market, you know who to call. I got some really great investor programs. ;)

[Judd Campbell]

Ha! Chasing the distressed landlord overseas!  I am debating selling one but it is Owen county @James Wilcox

I can inquire with my tax team but wanted to hear from the experts here with any advice as well. I ended up getting a state tax refund this year from Kentucky.  

[Jason Malabute]

Judd, your question touches on complex tax issues, especially regarding the Foreign Earned Income Exclusion (FEIE) and managing U.S. rental properties from abroad. Since U.S. rental income is classified as U.S.-sourced, it doesn’t typically qualify for the FEIE, regardless of where you or your wife manage the properties.  To navigate these complexities and ensure you’re optimizing your tax strategy, it would be wise to consult a tax professional who specializes in international taxation and U.S. real estate.

[James Wilcox]

Quote from @Judd Campbell:

Ha! Chasing the distressed landlord overseas!  I am debating selling one but it is Owen county @James Wilcox

I can inquire with my tax team but wanted to hear from the experts here with any advice as well. I ended up getting a state tax refund this year from Kentucky.  

Licensed in the state of Kentucky. Owen County not a problem. :)

Congrats on that state tax refund.