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    Whether you’re looking for fun and sun, a peaceful retirement, or the chance to earn some extra income, you’ve got a real world of opportunity open to you… In short, we’ve done our best to narrow down your best options, but only you can decide the right country for you.

    • Spain
    • Portugal
    • Panama
    • Belize
    • Colombia
    • Cyprus
    • Mexico
    • France
    • Montenegro
    • Browse All Countries

    Best For:

    • The Best Places To Retire
    • Health Care Abroad
    • Cost Of Living
    • Investing in Real Estate
    • Establishing Residency
    • Gun Laws In The World
    • English-Speaking Countries
    • Safest Places For Retirement
    • Best Places In Latin America
  • Budgets

    How Much Will It Cost You To Live Overseas?

    The only honest answer is, we have no idea. And neither does anyone else. The only one who can answer that question is you. Here’s the most important thing to understand about budgeting your new life overseas…

    Super Cheap

    • Chitré, Panama
    • Santa Marta, Colombia
    • Phuket, Thailand
    • Dumaguete, The Philippines

    Cheap

    • Medellin, Colombia
    • Boquete, Panama
    • Kyrenia, Cyprus
    • Hua Hin, Thailand
    • The Algarve, Portugal

    Affordable

    • Valencia, Spain
    • Cascais, Portugal
    • Las Terrenas, The DR
    • Pisa, Italy
    • La Rochelle, France
    • Mazatlán, Mexico

    Luxury

    • Ambergris Caye, Belize
    • Kotor, Montenegro
    • The Panama City Beaches
    • Paris, France
  • Resources

    Global Living

    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore & Diversification

    Making Money

    • International Real Estate
    • Banking
    • Employment
    • Investing

    Follow Us:

    • Meet Our Experts
  • Real Estate

    Buying Real Estate For Cashflow

    • Discover tips and strategies used by global property investing veterans

    Explore Our Latest Posts

    • Learn how to invest and purchase property abroad…

    Go To The Overseas Property Alert Site

    • How To Become Independently Wealthy And Fund The Lifestyle Of Your Dreams
  • Conferences

    Upcoming Events

    • Explore Our Events Site

    Live and Invest In Spain Conference

    Offshore Wealth Summit

    Argentina Workshop

    VALENCIA, SPAIN

    Sep. 17-19, 2025

    PANAMA CITY, PANAMA

    Oct. 15-17, 2025

    VIRTUAL

    Nov. 13, 2025

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    overseas living letter offers affordable retirement guidance
    The Simon Letter Wealth Protection Insights
    Global Property Advisor Global Investment Opportunities

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  • My Library
Live and Invest Overseas
  • Home
  • Countries

    Top Destinations:

    Whether you’re looking for fun and sun, a peaceful retirement, or the chance to earn some extra income, you’ve got a real world of opportunity open to you… In short, we’ve done our best to narrow down your best options, but only you can decide the right country for you.

    • Spain
    • Portugal
    • Panama
    • Belize
    • Colombia
    • Cyprus
    • Mexico
    • France
    • Montenegro
    • Browse All Countries

    Best For:

    • The Best Places To Retire
    • Health Care Abroad
    • Cost Of Living
    • Investing in Real Estate
    • Establishing Residency
    • Gun Laws In The World
    • English-Speaking Countries
    • Safest Places For Retirement
    • Best Places In Latin America
  • Budgets

    How Much Will It Cost You To Live Overseas?

    The only honest answer is, we have no idea. And neither does anyone else. The only one who can answer that question is you. Here’s the most important thing to understand about budgeting your new life overseas…

    Super Cheap

    • Chitré, Panama
    • Santa Marta, Colombia
    • Phuket, Thailand
    • Dumaguete, The Philippines

    Cheap

    • Medellin, Colombia
    • Boquete, Panama
    • Kyrenia, Cyprus
    • Hua Hin, Thailand
    • The Algarve, Portugal

    Affordable

    • Valencia, Spain
    • Cascais, Portugal
    • Las Terrenas, The DR
    • Pisa, Italy
    • La Rochelle, France
    • Mazatlán, Mexico

    Luxury

    • Ambergris Caye, Belize
    • Kotor, Montenegro
    • The Panama City Beaches
    • Paris, France
  • Resources

    Global Living

    • Living & Retiring Overseas
    • Raising A Family Abroad
    • Foreign Residency & Citizenship
    • Offshore & Diversification

    Making Money

    • International Real Estate
    • Banking
    • Employment
    • Investing

    Follow Us:

    • Meet Our Experts
  • Real Estate

    Buying Real Estate For Cashflow

    • Discover tips and strategies used by global property investing veterans

    Explore Our Latest Posts

    • Learn how to invest and purchase property abroad…

    Go To The Overseas Property Alert Site

    • How To Become Independently Wealthy And Fund The Lifestyle Of Your Dreams
  • Conferences

    Upcoming Events

    • Explore Our Events Site

    Live and Invest In Spain Conference

    Offshore Wealth Summit

    Argentina Workshop

    VALENCIA, SPAIN

    Sep. 17-19, 2025

    PANAMA CITY, PANAMA

    Oct. 15-17, 2025

    VIRTUAL

    Nov. 13, 2025

    Learn More About This Event
    Learn More About This Event
    PRE-REGISTER
    Learn More About This Event
    PRE-REGISTER
    • MORE EVENTS

    Contact Our Events Team

    Toll-Free U.S. and Canada:
    1 (888) 627 8834
    From Outside North America:
    1 (443) 599 1221
    Working Hours
    Monday – Friday 08:00 am – 17:00 pm EST.

    Reach us with your questions by email at: events@liveandinvestoverseas.com

  • Store

    Unlock The World

    • Access Your Library

    Overseas Havens Reports

    • Expats' comprehensive destination guides

    Conference Kits

    • Hours of coverage  from our latests conferences

    Lahardan Books

    • Titles on living and investing around the world
    • Explore Our Store
    Your passport to a life well-lived abroad

    Services

    overseas living letter offers affordable retirement guidance
    The Simon Letter Wealth Protection Insights
    Global Property Advisor Global Investment Opportunities

    Our Customer Service team is here to assist with any questions or concerns CustomerService@LiveandInvestOverseas.com

  • My Library
Live and Invest Overseas
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Home Taxes

Sexy Tax Talk

by Kathleen Peddicord
Aug 03, 2025
in Taxes
0 0
Aerial from the city Lagos with the Forte da Bandeira in Portuga

Adobestock/Nataraj

Americans are taxed on their worldwide income no matter where in the world they’re living.

If you are American and you invest in a cash-flowing property overseas—even if you move to the location to manage your rental directly—you’ll have to file a tax return with the IRS annually.

Nothing you can do about that… except be sure you understand the implications, the consequences, the associated requirements, and the relevant opportunities.

Because being required to file a tax return with Uncle Sam does not necessarily mean that you owe them money… though you could.

You may also have a tax filing and/or a tax payment requirement in the country where the property is located.

The possible permutations for what your tax situation might look like in the United States and in the countries where you might invest are many.

You need professional, experienced help to navigate the liabilities to ensure you don’t pay $1 more in tax—in any jurisdiction—than you must.

In the United States, you report rental income from properties overseas as you would report income from U.S. rental properties—that is, on Schedule E.

You can take the same deductions for an overseas property as you would for one in the United States, with the exception of depreciation. It’s calculated on a 40-year schedule for foreign properties.

If you invest in a farm property and aren’t doing the farming yourself, the income should qualify as farm rental income category, meaning you report it on Form 4835. Do the farm work yourself, and the income is reported on Schedule F.

The important difference is that Schedule F income is charged self-employment tax. Don’t let your accountant tell you that you have to use Schedule F to report income from an agricultural investment when you’re not doing the farm work yourself.

One benefit of buying an investment property in a place where you like spending time—as I strongly recommend you do—is that you can deduct travel expenses associated with checking on the property’s management.

In the country where the property is located, your tax liability depends on whether or not you’re living there. Spain, for example, charges 24% tax on gross rental income earned by a non-EU resident. Live in Spain or another EU (or EEA) country, and the tax is 19% of the net rental income earned (deductions aren’t the same as you are allowed in the United States).

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Other countries tax at source—that is, as the rental income is earned.

Income from the rental we owned in Portugal was taxed at 25% after deducting the rental management fee. Our rental manager figured the tax and sent the amount owed to the Portuguese government. We got the balance. That was our only income in Portugal, so no annual tax return was required.

Some countries treat rental income like regular income for foreigners. As there’s typically a minimum threshold before income tax is charged, you may not owe any tax on your rental income.

In Panama, for example, the rate is 0% up to $11,000 of income. If your net rental income is less than $11,000, you owe no tax. However, you’re still meant to file a tax return to report the income.

In a few cases, you may not owe any tax no matter how much revenue you earn. Income from timber investments is tax exempt in many countries if the project is properly registered. Panama doesn’t tax revenue from agriculture if the gross income for the farm is less than $350,000.

Remember, though, that, if you’re American, you’ll still be taxed on that income in the United States.

For any tax you pay to another country for revenue that is also taxable in the United States, you should be able to take a foreign tax credit on your U.S. tax return. Do this on Form 1116.

As depreciation of the property is allowed for U.S. taxes but is not allowed in many other countries, it’s possible you could have less taxable income in the

United States than you do in the other jurisdiction. Any foreign taxes that you can’t take a credit for in one year can be carried forward to future years. If you do your own taxes on a program like TurboTax, the program can take care of the calculations and any carry-forward amounts.

What about capital gains tax?

Not all countries charge it on real estate gains. Most that do impose a special capital gains rate, but a few tax capital gains as ordinary income.

New Zealand doesn’t tax capital gains on real estate.

In France, you’ll pay tax on capital gains from the sale of real estate according to a schedule that reduces the amount owed starting after five years of ownership. Hold the property for 22 years or more, and the capital gains tax is zero when you sell.

Unfortunately, France has implemented an additional social tax on gains. This also is reduced over the time you own the property, starting with the sixth year, but it doesn’t go away completely until you’ve owned the property for 30 years.

Some countries apply an inflation rate to adjust the gain calculation so it’s based on a current value of the original purchase price. Some have exemption amounts that reduce the taxable gains.

Americans are liable for capital gains tax in the United States no matter where they live or where the property overseas is located. However, the foreign tax credit comes into play here, as well, and you shouldn’t pay more in capital gains taxes than the highest applicable tax rate.

For example, if you’re taxed 10% on your gain in the foreign country and you fall into the 15% capital gains tax rate in the United States, you’d owe the IRS the 5% difference. Some deductions are allowed when calculating the gain.

Until next time,

Kathleen Peddicord signature
Kathleen Peddicord
Founding Publisher, Overseas Opportunity Letter

Tags: 'foreign property'Overseas investmentsrental income
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Kathleen Peddicord

Kathleen Peddicord

Kathleen Peddicord has reported on opportunities for Americans to live, retire, and do business overseas for 40 years. She has traveled to more than 75 countries, invested in real estate in 24, established businesses in 7, renovated and built properties in 6, and educated her children in 5.

Kathleen has moved children, staff, enterprises, household goods, and pets from the east coast of the United States to Waterford, Ireland, then to Paris, France, and finally to Panama City, Panama, where she has based her Live And Invest Overseas business. Peddicord and her husband, Lief Simon, now divide their time between Panama and Paris.

Peddicord was a partner with Agora Publishing’s International Living group for 23 years. She opened, staffed, and operated International Living publishing and real estate marketing offices in Waterford, Ireland; Panama City, Panama; Granada, Nicaragua; Roatan, Honduras; San Miguel de Allende, Mexico; Quito, Ecuador; and Paris, France. Peddicord launched Live And Invest Overseas group in 2008 and has built it into a successful multimillion-dollar business. Today, she shares her firsthand experience of expat life with more than 500,000 readers of her publications, including Overseas Opportunity Letter and Overseas Living Letter.

Kathleen has been featured often in The New York Times, MSNBC, AARP, CNN, Bloomberg, CNBC, and more and writes monthly about expat matters, international real estate, and offshore diversification for Forbes and U.S. News.

Kathleen has written several books including the memoirs “At Home In Ireland” and “At Home At Los Islotes” and her latest title “At Home Abroad,” all published by Lahardan Books. Her best-selling "How To Retire Overseas: Everything You Need To Know To Live Well (For Less) Abroad” was published by Penguin Random House in 2018 and her “Buying Real Estate Overseas For Cash Flow (And A Better Life)” was published by Wiley in August 2020.

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HOME

Top Countries

  • Spain
  • Portugal
  • Panama
  • Belize
  • Colombia
  • Cyprus
  • Mexico
  • France
  • Montenegro

Best For:

  • Health Care Abroad
  • Retirement Living
  • Cost Of Living
  • Investing in Real Estate
  • Establishing Residency
  • Gun Ownership
  • English Speakers
  • Safety
BROWSE ALL COUNTRIES

Budgets

How Much Will It Cost
To Live Overseas?

Super Cheap

  • Chitré, Panama
  • Santa Marta, Colombia
  • Phuket, Thailand
  • Dumaguete, The Philippines

Cheap

  • Medellin, Colombia
  • Boquete, Panama
  • Kyrenia, Cyprus
  • Hua Hin, Thailand
  • The Algarve, Portugal

Affordable

  • Valencia, Spain
  • Cascais, Portugal
  • Las Terrenas, The DR
  • Pisa, Italy
  • La Rochelle, France
  • Mazatlán, Mexico

Luxury

  • Ambergris Caye, Belize
  • Kotor, Montenegro
  • The Panama City Beaches
  • Paris, France

Resources

Global Living

  • Living & Retiring Overseas
  • Raising A Family Abroad
  • Foreign Residency & Citizenship
  • Offshore & Diversification

Making Money

  • International Real Estate
  • Banking
  • Employment
  • Investing
Meet Our Experts

Real Estate

Overseas Property Alert 

 

How To Become Independently Wealthy And Fund The Lifestyle Of Your Dreams

VISIT SITE

Buying Real Estate For Cashflow

 

Discover tips and strategies used by global property investing veterans

READ MORE

Explore Our Latest Posts

 

Learn how to invest and purchase property abroad…

EXPLORE

Conferences

Live and Invest In Spain Conference

VALENCIA, SPAIN Sep. 17-19, 2025
Learn More About This Event

Offshore Wealth Summit

PANAMA CITY, PANAMA Oct. 15-17, 2025
Learn More About This Event
PRE-REGISTER

Argentina Workshop

VIRTUAL Nov. 13, 2025
Learn More About This Event
PRE-REGISTER
MORE EVENTS

Contact Our Events Team:

Toll-Free U.S. and Canada:
1 (888) 627 8834

From Outside North America:
1 (443) 599 1221

Working Hours
Monday – Friday 08:00 am – 17:00 pm EST.

Reach us with your questions by email at: events@liveandinvestoverseas.com

Store

Overseas Havens Reports

  • Expats' comprehensive destination guides

Conference Kits

  • Hours of coverage  from our latests conferences

Lahardan Books

  • Titles on living and investing around the world

Services

  • Overseas Living Letter: Affordable Retirement Guidance
  • The Simon Letter: Wealth Protection Insights
  • Global Property Advisor: Global Investment Opportunitites
VISIT OUR STORE

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THE 10 BEST PLACES TO RETIRE IN 2025

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