What taxes does a foreign owner of U.S. property pay?

How is rental income from a U.S. home taxed for a nonresident?

By default, the IRS taxes a nonresident alien's U.S. rental income at 30% of the gross amount, or a lower treaty rate, when the income is not effectively connected with a U.S. trade or business (ECI). Section 871(d) offers an alternative: the owner can elect to treat the rent as ECI, so it is taxed at graduated rates instead. The election is made by attaching a statement to Form 1040-NR, per the IRS page on nonresidents' U.S. real property.

Whether a treaty rate exists depends on where you live. Check the IRS list of income tax treaties for your country. Some countries have no treaty at all; Brazil is one, as the list jumps from Belgium to Bulgaria. Choosing between the gross-rent default and the 871(d) election is the first conversation to have with a U.S. CPA, ideally before your first guest checks in.

Sources: IRS, Nonresident aliens: real property located in the U.S. · IRS, United States income tax treaties A to Z

How much does the buyer withhold under FIRPTA when you sell?

When a foreign person sells U.S. real estate, the buyer must withhold part of the amount realized and remit it to the IRS. FIRPTA has three tiers, based on the price and on how the buyer will use the property.

Withholding is a prepayment, not the final tax. If the actual tax will be lower, the seller can apply to the IRS for a withholding certificate that approves a reduced amount. When the buyer of your vacation home is another investor with no plan to live there, the 15% tier applies.

Sources: IRS, FIRPTA Withholding (revised July 21, 2026) · IRS, Exceptions from FIRPTA Withholding · 26 U.S. Code § 1445 (Cornell LII)

Why does the $60,000 estate tax threshold matter?

The U.S. estate tax reaches the U.S.-situated assets of people who are neither citizens nor residents. When those assets, plus adjusted taxable gifts, exceed $60,000, the estate must file Form 706-NA, according to the IRS FAQ on estate taxes for nonresidents.

That threshold is low enough that succession should be planned on the day you buy, not later. How you hold title (individually, jointly, through an LLC or another structure) changes the outcome, and that is work for an attorney who handles cross-border estates.

Sources: IRS, FAQ on estate taxes for nonresidents not citizens of the U.S.

What should you check about taxes in your home country?

Your home country may also tax the rent and the sale, under its own rules and calendar. The questions to bring to a local tax adviser are much the same wherever you live.

• Is U.S. rental income taxable at home, and when is it due?
• Can the federal tax paid to the IRS be credited, and under a treaty or under a domestic rule?
• Are U.S. state and local taxes creditable, or only federal tax?
• How is a U.S. LLC treated: as transparent, or as a foreign company you control?
• Is there a reporting threshold for assets held abroad?

If you plan to hold the home through a company, the Florida side of costs and filings is in buying Florida property with an LLC.

Sources: IRS, United States income tax treaties A to Z

How does Brazil tax a U.S. property owned by a resident?

Many of my clients live in Brazil, so here is how those questions are answered there. Rent received from abroad goes into the monthly carnê-leão, due by the last business day of the month after receipt, and then into the annual return (Receita Federal). There is no income tax treaty, but the Receita Federal accepts a credit for federal tax paid in the U.S. on a reciprocity basis, within the limits of IN SRF 208/2002 and without proof of reciprocity for the U.S. U.S. state and local taxes are not creditable, per question 142 of the IRPF 2026 Q&A.

Law 14,754/2023, often called the offshore law, taxes financial investments and profits of controlled foreign entities at 15%. Under article 2, paragraph 2, a property held directly by the individual is not a financial investment, so its sale follows the regular capital gains rules, and rent stays in the carnê-leão. If the home is in an LLC treated as a controlled entity, profits are taxed on December 31 of each year (article 5), with an irrevocable option to report the company's assets as if held personally (article 8).

Finally, Brazilian residents with assets abroad totaling $1,000,000 or more on December 31 must file the CBE with the Central Bank between February 15 and April 5 of the following year. Fines range from R$ 2,500 to R$ 250,000 and may rise by 50% (Banco Central do Brasil).

Sources: Receita Federal, IRPF 2026 Q&A · Lei 14.754/2023 (Planalto) · Banco Central do Brasil, CBE