U.S. TAX GUIDE IN THE UAE
Do I need to report rental income from the UAE to the IRS?
Yes, US individuals renting out property in the UAE must report the rental income on their US tax return. You can deduct expenses like repairs and management fees to offset this income. Net rental income is taxable in the US, while net losses can benefit you depending on your tax situation.
What if I live in my UAE property?
Using the property as your primary residence doesn’t create a tax liability but affects your ability to claim housing expense deductions. While mortgage interest can be deducted, it may not be as beneficial as housing expense deductions.
How do I handle selling my home in the UAE?
- Exclusion on Gain from Sale: You can exclude gains if you’ve lived in the property for at least two of the past five years. The exclusion is $250,000 for single or married filing separately, and $500,000 for married filing jointly.
- Tax on Remaining Gain: Any gain beyond the exclusion limit is taxable.
What should I remember about owning property in the UAE?
- Report Rental Income: Include all rental income on your US tax return.
- Seek Professional Help: A tax professional can guide you on deductible expenses.
- Consider Sale Implications: Understand the tax implications and exclusion limits when selling your property.
