Salary After Tax · Updated June 2026
Foreign Rental Income – US Expat Tax Calculator
A foreign rental enters the US return like a domestic one – Schedule E, worldwide income – but with expat twists: depreciation runs on a 30-year ADS schedule (not 27.5), income/expenses convert at average FX rates, and the local country usually taxes first with FTC reconciliation.
The sleeper issue is FX on disposition: selling a foreign property repays a foreign mortgage, and currency movement on that mortgage can create taxable US "phantom gains" even when the property merely broke even locally.
Salary after tax calculator · 2026
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Where every dollar goes
2026 rules: federal brackets, $16,100/$32,200 standard deductions, $184,500 SS wage base. Hourly figures assume 40 h/week × 52. Non-US figures are planning estimates incl. employee social charges.
Key insights
Key insights
- Foreign property depreciates over 30 years (ADS).
- FX conversion at average rates; dispositions at spot.
- Phantom FX gains on foreign mortgages are real and taxable.
- Local country taxes first; FTC passive basket reconciles.
- Avoid entity wrappers for single properties – form overhead.
Mechanics that differ from domestic rentals
Depreciation: building basis ÷ 30 years (ADS for foreign property) – a Lisbon flat bought at €400k yields ≈ €11k/year of deduction against rent. Losses fall under passive-activity rules; the $25k active-participation allowance phases out by $150k MAGI.
Coordination: local tax (e.g., Portugal's 25–28% rental rates, Spain's 19–24% with Beckham exemptions for regime holders) credits against US tax via Form 1116's passive basket. Entity ownership (foreign company/SCI) adds 5471/8858 forms – usually not worth it for one property.
FAQ
Frequently asked questions
Do I report foreign rental income to the IRS?
Yes – worldwide income includes every foreign rental, on Schedule E, converted at average exchange rates, regardless of where the tenant or property sits.
How is depreciation different abroad?
Foreign residential property uses the 30-year ADS life instead of 27.5 – about 9% less annual deduction, recaptured identically on sale.
I pay rental tax locally – double taxed?
No – local rental taxes credit against US tax on the same income via Form 1116 (passive category). Whichever rate is higher sets your total burden.
What is the FX phantom gain problem?
Repaying a foreign-currency mortgage after the dollar weakens creates a §988 gain measured in USD – taxable even if the property sale itself broke even. Price it before selling.
Does the FEIE cover rental profits?
No – FEIE is earned-income only. Rentals rely on depreciation, expenses, and the FTC for relief.
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