Foreign Rental Property Depreciation

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  • JohnH
    Senior Member
    • Apr 2007
    • 5339

    #1

    Foreign Rental Property Depreciation

    First time I've run across this and it seems cut & dried, but I'd like to ask if anyone would care to comment. Taxpayer from Germany is legally living & working in the US. Prior to this year, he deducted interest income & property taxes on the US home he's buying plus a home he owns in Germany.

    After having some major renovations done, last year he began renting the home in Germany to someone, so now it's a rental property. I was surprised to learn that unlike domestic rentals, foreign rental property must be depreciated over 40 years. (In fact, I ran across it by accident).

    I assume that the 40-year rule applies to any type of foreign property (commercial or residential rental) and would like to ask if anyone can confirm that for me.
    "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith
  • appelman
    Senior Member
    • Jan 2010
    • 1195

    #2
    You are correct!

    You are correct! Tangible property used predominantly outside the US must be depreciated by ADS, and the ADS recovery period is 40 years for both residential and non-residential real property. (See Pub. 946, p. 35 and p. 41.)
    Evan Appelman, EA

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