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Updated 3 months ago,

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Miguel Alvarado
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Tax Exemptions, LLC Structure, and Depreciation for Foreign STR Properties

Miguel Alvarado
Posted

Hello BP Community,

This is my first post and I am not sure if I am asking too much!

I'm exploring the idea of investing in a short-term rental (STR) property abroad and have a few questions regarding how to structure it for tax efficiency. I've learned a lot about the tax loopholes for STRs in the U.S., such as the ability to offset W-2 income with rental losses using accelerated depreciation, but I'm unsure if the same strategies apply when dealing with foreign properties. Any advice would be greatly appreciated!

Specifically, I’m trying to understand:

Tax Loopholes for Foreign Properties:

  - Do the same STR tax benefits (such as accelerated depreciation) apply to properties located outside the U.S.?
  - Can foreign STR losses still offset W-2 income, or are there limitations I should be aware of?

LLC for Foreign Property:

 - Is it necessary to form a new LLC specific to the foreign property, or can it be owned under an existing U.S.-based LLC?
- Are there any benefits to creating a local LLC (in the foreign country) vs. keeping ownership under a U.S. entity?

Maximizing Depreciation:

- What strategies have investors used to maximize depreciation on foreign properties?
- Are there any differences in how depreciation is calculated for foreign properties vs. U.S. properties?Does anyone have experience with cost segregation studies for foreign STRs?

    I’m aiming to keep everything compliant while maximizing the tax benefits. If anyone here has experience with STRs abroad or has consulted with international tax experts, I’d love to hear your insights!

    Thanks in advance for your help!

    Best, Miguel

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