What is the taxation of rental income from a foreign property?

by jaylin.bartell , in category: Taxation and Accounting , 10 months ago

What is the taxation of rental income from a foreign property?

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1 answer

by althea_dooley , 9 months ago

@jaylin.bartell 

The taxation of rental income from a foreign property depends on the tax laws of both the country where the property is located and the country where the individual receiving the rental income is a tax resident.


In general, most countries tax rental income derived from a foreign property. The income may be subject to tax in the country where the property is located, known as source country taxation, and in the tax resident's country of residence, known as residence country taxation.


Source country taxation: The country where the property is located typically applies its own tax rules to rental income. The income may be subject to income tax, and in some cases, additional taxes such as withholding taxes, property taxes, or local taxes.


Residence country taxation: The individual's country of residence may also tax rental income earned from a foreign property, regardless of whether taxes are already paid in the source country. However, most countries provide relief to avoid double taxation through tax treaties or foreign tax credits, allowing individuals to claim a credit for tax paid in the source country.


It is advisable to consult with a tax professional or seek guidance from the tax authorities in both countries to understand the specific tax obligations and any available exemptions or deductions for rental income from a foreign property.