Author Topic: US Citizen residing in Germany, tax implications of US rental property income?  (Read 840 times)

Marvel2017

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Hello, my wife and I are US Citizens and plan on moving to Germany (wife is a Dual citizen of US/Germany). We would be there longer than 6 months so would be considered residents under German tax law. We currently have rental property in the US and we're wondering about the tax implications. Wanted to see if anyone has been in this situation. I know I should consult a tax advisor but wanted to just get a general idea of what we might encounter. Thanks!

Lives to travel

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I was stationed in Germany, with a rental property in NC, as an Alaska resident, so I can tell you what I experienced:

US Federal Income Tax: Schedule E every year, if I had economic net income it was taxed as ordinary income in the US
North Carolina: Had to file a non-resident return for the years that I made money.  Only taxed on my NC source income (just the property).
Alaska: No state tax

You'll have to ask a German tax specialist if you have any obligations under the German tax code.


Christof

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The US and Germany have an agreement to avoid double taxation on federal taxes. More details at http://www.bundesfinanzministerium.de/Web/DE/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Vereinigte_Staaten/vereinigte_staaten.html.

From my understanding you can essentially deduct US federal tax payments (not state tax if applicable) and end up paying whatever is the higher tax rate.

I would worry more about bank accounts and investments, though... It's getting hard for US citizens to open a bank account in Germany due to US reporting requirements. A lot of US funds are also considered to be intransparent according to German tax laws which adds a tax penalty.