Hello All,
Hopefully the introduction I have provided in my description has given you a little insight into my current situation.
I am an established landlord in the UK, I live in Hong Kong, and am looking to diversify to investing in property in another country - top of my list is currently USA.
The reasons for my decision to diversify away from the UK is primarily due to political reasons - the general attitudes from a political perspective are currently quite toxic towards landlords - i.e. a number of new taxes and regulations have been introduced over the past few years to make rental investing less attractive and to encourage more home ownership - I don't expect this to change in the near future (as an example, it is now not possible to deduct mortgage interest from the income before taxation in the UK).
I would be particularly interested in understanding more about how the taxation works in the USA with regards rental income, and more precisely would I be at an advantage/ disadvantage due to the fact that I would have no other employment income/ would not be resident in the USA.
I have read several articles on the topic of taxation, but understandably I have not found any that cover my scenario with regards taxation when you don't have any other income that would be reported to the IRS.
Specifically:
- Can you earn an amount of rental income in the USA before you are liable to pay tax? For comparison, in the UK the first $15600 of income you earn is tax free (this relates to any income, not just rental).
- I understand that it is possible to claim for tax relief on the depreciation of buildings, and that it is therefore possible to show a paper loss from a tax perspective, even if you have positive cash flow - I assume under normal circumstances, this tax loss could be offset against your other sources of income... what happens if you have no other sources of income in the US? Does the tax loss accrue/ carry over to future years? Or is it forfeit? How long does the accrued tax benefit last?
- Finally, I understand you have state/ county taxes as well as federal taxes... are these state taxes payable even during void periods where the property is empty?
I'd be really interested to understand if there are other international investors who could provide some comments/guidance? Or if anyone does have decent tax knowledge to give me some general guidance on these points around taxation.
Thanks in advance,
Chris.
