Hi,

Ok, I am planning to move to US (yes its not easy I realised that, getting job where one wants is ridiculously difficult. I plan to visit US on a VWP and then try and get a job come back here to AU and get my e-3).

Anyway - The question I have is this. I have a property that I own here. Recently bought. So if I move to US and I rent this property out, I will be close to 1500 AUD per month out of pocket (the rent will not offset my repayments/depreciation/costs etc)........

I am trying to know if this can be set off against my US income.

Lets say I am here in AU and I earn salary and have the same property rented out, I could set off that 1500 AUD pm to my salary income.

Now if I moved to US, this is what Australian Tax Office has to say re : my residency status for tax purposes.
Examples of residents and non-residents
Refer to example "Bronwyn – an extended job overseas".....

I have also been to the US webpages showing how one is defined to be US resident for tax purposes. Lets just assume I pass that 183 days test and I am US tax resident, can I set this negative income from my rental property from AU ? Being US resident for tax purpose, I am taxed on worldwide income, so i assume the negative income can be set off.

Can you please share your views/guide me ?

Thanks in advance. Neil

AtlantaTaxExpert

If you file as a non-resident alien (filing Form 1040NR), you CANNOT claim the rental loss because your world-wide income is NOT subject to U.S. income taxes.

However, if you file as a dual-status or a resident alien (which involves filing Form 1040 in one form or another), then you CAN claim the rental loss using Schedule E.

This is NOT a return for an amateur. Get professional help!

neil-e3

If you file as a non-resident alien (filing Form 1040NR), you CANNOT claim the rental loss because your world-wide income is NOT subject to U.S. income taxes.

However, if you file as a dual-status or a resident alien (which involves filing Form 1040 in one form or another), then you CAN claim the rental loss using Schedule E.
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Thanks a lot for that !

Can I know why one would file a 1049NR. Are there are advantages ?

For my personal reasons, dual status or resident alien (FORM 1040) seems perfect. Does this have to be done in a time frame from when I reach there ? or During filing of the tax return ? I hear the maximum I can claim is 25,000 USD loss on rental property in a year ?

Also, even if I were to not satisfy the 183 days ( current year + 1/3rd of prior +1/6th of prior to that), I still can elect to be a resident alien. Is there a form for that too ? and is there a time frame for that ?

Thanks in advance............

MukatA

1. If in your first year, you do not meet substantial presence test (183 days), you are non resident. If you are married, then you can both choose to file resident return.
2. If in the first year, you meet SPT you are dual status. If you are married, then you can both choose to file resident return.
3. On Dual status you are nonresident at the beginning of the year and resident at the end on the year. During resident period, you declare world wide income and loss. Read: Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income

neil-e3

Thanks....

substantial presence test - even If I dont satisfy that, I am able to 'select' myself to be resident alien.........'from the date moving forward election'......

In that case, I am resident alien regardless if SPT is passed or not and there by able to declare world wide income and there by losses ??

AtlantaTaxExpert

Neil:

If you are single, you CANNOT file as a resident alien unless you spend EVERY SINGLE DAY in 2008 as a resident alien in the U.S. It only takes ONE DAY as a non-resident alien to invalidate filing as a resident.

If you are in the U.S. as a resident alien for MORE than 183 days, then you MUST file as a dual-status alien.

If you are in the U.S. as a resident alien for LESS than 183 days, then you CAN file as a dual-status alien, with a requirement that you must wait until early June 2009 to file, but your default is to file as a non-resident alien.