Working out your tax obligations as a landlord in the USA can be complex and will depend on the amount of income you receive as
well as on your country of domicile. However, we will do
our best to answer this as succinctly as possible. Your property management company or a good
the USA accountant or tax attorney will be able to shed further light
on your specific tax obligations.
There is no state income tax in Florida, meaning
that the tax paid on your rental income will be paid directly to
the federal government. Small local charges may still apply, however, so, again, it's worth checking with a local accountant or tax attorney in the USA. Property owners declaring their rental income in the United State must file a federal tax return, known as the form 1040NR form.
The good news is that, due to reciprocal tax agreements in place between the United States and most Western governments, you will not be taxed twice on your rental income should you live outside the US. This means that if you are resident in the UK and declare your income to the HMRC you will not also be taxed in the USA and vice versa.
If you declare your income in the USA, you can expect to pay federal tax on your rental property of 15-35%
depending on precisely how much income you receive each month. This tax is due on
the net profit you make from renting out a property, and there
are a number of expenses owners can deduct from this income for tax
purposes in addition to the usual costs associated with owning a property.
These include the
interest on a US mortgage (if applicable) and any depreciation of the property. You can also deduct the cost of two inspection
visits per year against your tax. Due to these deductions many rental
home owners won't actually make a taxable profit from their rental
operations and will therefore not have to pay US income tax.
An important side-note is that, in the State of Florida, short term
rentals of less than six months are classed as transient rentals and are
subject to the both the Florida state sales tax and the Orange County
tourist tax. The homeowner is required by law to register for these and file a monthly tax return to
both the county and the state.
Sales and tourist taxes won't typically cost the owner anything as the person
responsible for collecting the rent, usually their property management
company, will charge the tax to the guest as part of their fees.