United States · owners abroad
US owners of a rental property in Europe: local tax, Schedule E and Form 1116
A US citizen or resident letting a home in Spain, France, Italy or Germany: local tax, Schedule E and Form 1116 on the US deadline. Depreciation and FBAR traps.
Updated · Yann Lephay
Direct answer
Our call: work out the local tax first, because what you owe in the country of the property becomes your US foreign tax credit, but never let the European calendar delay the US one. Your US return is due on 15 April; Form 4868 gives an automatic six-month extension to file, not to pay. Then report the rent on Schedule E in dollars, depreciate over 30 years straight line (required for property used outside the US) and claim the credit on Form 1116 in the passive category. The traps we see in the rules: assuming 27.5-year depreciation, skipping Form 1116, and forgetting the FBAR once your foreign accounts pass $10,000.
The steps for a US owner (checked 27 October 2026)
| Step | Where | Form | When | What to know |
|---|---|---|---|---|
| 1. Local return | Country where the property is | Spain: Modelo 210; France: 2042 / 2044; Italy: Redditi PF; Germany: ESt 1 C + Anlage V | Spain: 2026 rent grouped annually (or October-December declared separately) 1-20 April 2027; Italy: 2 November 2026 for tax year 2025; France and Germany: annual campaign | The local rules follow where you live and your social-security cover, not your US citizenship: Spain charges 19% on net rent to EU/EEA residents and 24% on gross rent to others, including US residents; France exempts owners covered by EEA, Swiss or UK social security from CSG/CRDS (7.5% levy only), otherwise 17.2% or 18.6% |
| 2. Rent and expenses | United States | Schedule E (Form 1040) | With your return: 15 April 2026 for tax year 2025; Form 4868 extends filing by six months but not payment | Translate income and expenses into US dollars; if the local return is due later (Italy: 2 November), estimate the local tax from its rules so you can pay the US tax on time |
| 3. Depreciation | United States | Form 4562 | Year the property is placed in service | ADS is required for property used predominantly outside the US: 30 years for residential rental property placed in service from 2018 (40 years before), and no bonus depreciation |
| 4. Foreign tax credit | United States | Form 1116, passive category | With your return | Rents are generally passive category income (active business rents and high-taxed income follow other rules); foreign rent is not reported on a qualified payee statement, so the no-Form 1116 election does not apply |
| 5. Foreign accounts | FinCEN / IRS | FBAR (FinCEN Form 114); Form 8938 above its thresholds | FBAR: 15 April, automatic extension to 15 October | FBAR if your foreign accounts together exceed $10,000 at any time in the year; Form 8938 above $50,000 at year end or $75,000 during the year (single, living in the US) |
Local tax first, US deadline always
The European rent belongs on your US return as foreign-source income. What reduces the double tax is the foreign tax credit, which covers qualifying foreign income tax paid or accrued, so you need the local figure. Where the local return comes after 15 April, as Italy's Redditi PF does, do not wait for it: the IRS states that an extension of time to file is not an extension of time to pay. Work out the local tax from that country's rules, pay the US tax by the original due date and keep the local assessment for your records. IRS Publication 514 notes that you can take a credit or an itemised deduction for qualifying foreign taxes, and that the credit is usually worth more.
Depreciation is slower than at home
IRS Publication 946 lists property used predominantly outside the United States among the assets that must use the Alternative Depreciation System. For residential rental property placed in service after 2017 that means 30 years straight line, not the 27.5 years of a US rental, and no special depreciation allowance. If you have been using 27.5 years on a European rental, raise it with your preparer.
Questions to raise with your preparer
Is the local tax a creditable income tax for this year and this category? In particular, Spain taxes an empty home on imputed income, which has no matching rent on Schedule E. How are mortgage interest and currency movements handled? Does the treaty with the property country change the result? We do not answer these for you: they depend on your facts and the treaty.
Where our tools fit
On the local side only: Modelo 210 Desk prepares a simple Spanish non-resident case, Anlage V Easy a German rental file, LMNP Facile a French furnished-rental file. None of our tools prepares a US return.
Hard stop
An LLC or partnership owner, a short let run as a business, a property sold or exchanged, a home used partly by you, or an unsettled treaty question needs a US preparer who handles foreign property.
Related routes