How much will I be taxed on my rental income in the USA?

12th August, 2014
  • 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.


    by: Prime Asset Investments

Comments (0)

Recent Q&A

Featured Posts

  • product HOUSING MARKET CONTINUES GRADUAL CLIMB BACK TO NORMAL IN USA

    According to the NAHB/First American Leading Markets Index, markets in 146 of the approximately 340 metro U.S. areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the second quarter of 2016. This represents a year-over-year net gain of 66 markets.

    9th August, 2016
  • product ZIKA VIRUS MAY AFFECT PROPERTY VALUES IN PARTS OF MIAMI

    Miami's trendy Wynwood neighborhood, which experienced a huge boom in property values over recent years, now faces a tremendous amount of fear and uncertainty as a result of the arrival of the mosquito-borne Zika virus says Barry Sharpe, who heads Miami-based Property Tax Appeal Group.

    9th August, 2016
  • product NEW HOME SALES IN U.S. REACH HIGHEST LEVELS SINCE 2008 MARKET CRASH

    According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes in the U.S. rose 3.5 percent in June 2016 from an upwardly revised May 2016 reading to a seasonally adjusted annual rate of 592,000 units. New home sales are up 9.3 percent in the second quarter of 2016 from the first quarter.

    28th July, 2016