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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3126
Experience:  IRS licensed Enrolled Agent and tax instructor
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We are french and we bought a villa in Orlando. We

Customer Question

Hello
We are french and we bought a villa in Orlando.
We are trying to file IRS for the first time.
It's not very easy for us because it's very different from french taxes.
We are 6 owners. my wife and I, my parents and my parents in law.
We rent our villa a big part of the year and we go to our villa for repair it and for holidays.
if I well understand, we need to send a tax declaration for each of us, but the incomes and the expenses of the villa can be put only in one of the declarations.
Am I good?
We determined that we are a nonresident aliens and we need to send six 1040NR , one 1040 schedule E , one 4562 , and one 8582.
Am I always good?
Kind regards
Jean-Michel
Submitted: 2 years ago.
Category: Tax
Expert:  emc011075 replied 2 years ago.
Hi Jean-Michel. My name is ***** ***** I will be happy to help you.
If 6 of you own the property, all 6 of you will have to file Schedule E with your 1040NR to claim the income (rent received). Each of you will claim 1/6 of the income and each of you should claim 1/6 of the expenses. Otherwise one of you (the one claiming expenses) will end up with losses he cannot use and 5 of you will have to pay taxes on the entire income. Also, certain deductions like depreciation or property taxes has to be split between 6 of you. If you only own 1/6 of the property, you cannot claim the depreciation for the entire house.
For instance you collected $24,000 in rent and had $12,000 in expenses. If each of you claim 1/6 of the income - $4,000 and only one of you claim the expenses, five of you will have to pay taxes on $4000 profit and one of you, the one with expenses will claim $8000 loss he will probably not be able to use. If each of you have to claim $4000 in income and $2000 in expenses each of you will end up with $2,000 profit. If each of you claim 1/6 of the expenses, your total taxable income will be $12,000 (2000x6), if only one of you claim the expenses, your total taxable income will be $20,000 (4000x5). This is a very simplified example but you it is more logical to split the expenses.
All six of you will have to file all forms. To calculate your depreciation, keep in mind that each of you only own 1/6 of the property, so if you purchased the house for 240,000 for example, each of you will use $40,000 as basis for depreciation.
Let me know if you have any questions.
Expert:  emc011075 replied 2 years ago.
I see you read my respond. Any questions? Is there anything else I can help you with today?
And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.