Overseas living and managing rentals FEIE

Tax, SDIRAs & Cost Segregation
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Overseas living and managing rentals FEIE

Judd Campbell
Georgetown, KY · Member since 2014 · 179 posts · 55 votes

Been gone a long time from the forums, 

Hoping someone with tax expertise could help me here.  

My wife and I have 16 rental units in Kentucky and although we have an on the ground handyman we mange financial things remotely.  

We are living in Phuket Thailand currently and this year I utilized the Foreign Earned Income Exclusion to not pay taxes on the first 120k of income.  any income over that which is a combination of W2 and rental income is subject to taxes starting at zero.  so this eliminates taxes on the TOP end of income.  (if I made $200k I would be taxes on 80k after taking the standard deduction and child tax credits, etc.  no AMT or anything.  

Also, I have a 10 year visa for Thailand which excludes me from paying any taxes on income or wealth here in Thailand.  so no local taxes. 

The question is, my wife and I are both able to take the FEIE if we are both working.  My W2 income takes all my FEIE, can I have our rental property business expense her management at $100k?  this would have the rentals break even on my income, and her 100k of income would be untaxed under the FEIE.  

is this possible?  She and I jointly own about 10 units while the rest are under my name.  No leverage, not much in the way of repairs as they are all rehabbed with long term tenants.  Low cost basis so the depreciation is not high. 

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Bill HamptonBusiness Member
Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 977 votes
2y

@Judd Campbell

The rentals are located in the US, so the income is not considered foreign income. Managing the rentals from Thailand does not make it foreign income. 

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  • Bill HamptonBusiness Member
    Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 977 votes
    2y

    @Judd Campbell

    The rentals are located in the US, so the income is not considered foreign income. Managing the rentals from Thailand does not make it foreign income. 

    404-482-3170
    Hampton Tax and Financial Services LLC4.7106 Reviews
    WebsiteView Page
    1Reply
  • Judd Campbell
    OP
    Georgetown, KY · Member since 2014 · 179 posts · 55 votes
    2y
    Quote from @Bill Hampton:

    @Judd Campbell

    The rentals are located in the US, so the income is not considered foreign income. Managing the rentals from Thailand does not make it foreign income. 


     correct, it is not foreign income.  My wife working to manage the rentals is foreign earned income for her.  My Rental Schedule E would show rental income, expenses such as tax, insurance, repairs, etc and property management.  if my wife is paid 30% of collected rents to manage the property it will reduce my Schedule E profit. This would be a pretax payout to my wife.  because she declares income while being overseas, she can exclude the first 120k from federal taxes.  

    I am paid by a US company within a US bank account.  we are physically overseas more than 330 days so we can use the FEIE.  confirmed by Deloitte and Ernst & Young as they have been doing my taxes. 

    0Reply
  • Henry ClarkPro Member
    Developer · Member since 2020 · 4k+ posts · 4k+ votes
    2y

    Ask the cpa Firm.  You would

    Probably then need to pay Self Employment tax.  

    0Reply
  • James WilcoxBusiness Member
    Real Estate Agent · Bowling Green KY ~ Lexington, KY · Member since 2015 · 1k+ posts · 600 votes
    2y
    Quote from @Judd Campbell:

    Been gone a long time from the forums, 

    Hoping someone with tax expertise could help me here.  

    My wife and I have 16 rental units in Kentucky and although we have an on the ground handyman we mange financial things remotely.  

    We are living in Phuket Thailand currently and this year I utilized the Foreign Earned Income Exclusion to not pay taxes on the first 120k of income.  any income over that which is a combination of W2 and rental income is subject to taxes starting at zero.  so this eliminates taxes on the TOP end of income.  (if I made $200k I would be taxes on 80k after taking the standard deduction and child tax credits, etc.  no AMT or anything.  

    Also, I have a 10 year visa for Thailand which excludes me from paying any taxes on income or wealth here in Thailand.  so no local taxes. 

    The question is, my wife and I are both able to take the FEIE if we are both working.  My W2 income takes all my FEIE, can I have our rental property business expense her management at $100k?  this would have the rentals break even on my income, and her 100k of income would be untaxed under the FEIE.  

    is this possible?  She and I jointly own about 10 units while the rest are under my name.  No leverage, not much in the way of repairs as they are all rehabbed with long term tenants.  Low cost basis so the depreciation is not high. 

    I don’t have much to offer on that front, but I just wanted to say hi to the famous @Judd Campbell! If you ever decide to list those properties for sale on the open market, you know who to call. I got some really great investor programs. ;)

    REI James w/ eXp Realty54 Reviews
    WebsiteView Page
    0Reply
  • Account Closed
    Accountant · San Diego, CA · Member since 2019 · 1k+ posts · 552 votes
    2y
    Quote from @Judd Campbell:

    Been gone a long time from the forums, 

    Hoping someone with tax expertise could help me here.  

    My wife and I have 16 rental units in Kentucky and although we have an on the ground handyman we mange financial things remotely.  

    We are living in Phuket Thailand currently and this year I utilized the Foreign Earned Income Exclusion to not pay taxes on the first 120k of income.  any income over that which is a combination of W2 and rental income is subject to taxes starting at zero.  so this eliminates taxes on the TOP end of income.  (if I made $200k I would be taxes on 80k after taking the standard deduction and child tax credits, etc.  no AMT or anything.  

    Also, I have a 10 year visa for Thailand which excludes me from paying any taxes on income or wealth here in Thailand.  so no local taxes. 

    The question is, my wife and I are both able to take the FEIE if we are both working.  My W2 income takes all my FEIE, can I have our rental property business expense her management at $100k?  this would have the rentals break even on my income, and her 100k of income would be untaxed under the FEIE.  

    is this possible?  She and I jointly own about 10 units while the rest are under my name.  No leverage, not much in the way of repairs as they are all rehabbed with long term tenants.  Low cost basis so the depreciation is not high. 


     Hey Judd, 

    There are scenarios where paying your wife under the management company would make sense. Not very helpful as a post but the right thing to do here is share your entire situation with an accountant. 

    Just a note for you since I was just talking to a client about this: 

    if you live in a high-income state or have privacy concerns and are living the digital nomad lifestyle, south Dakota has an interesting residency status program that can potentially save you guys 10s of thousands on income tax and have great anonymity. 

    1Reply
  • Judd Campbell
    OP
    Georgetown, KY · Member since 2014 · 179 posts · 55 votes
    2y
    Quote from @James Wilcox:
    Quote from @Judd Campbell:

    Been gone a long time from the forums, 

    Hoping someone with tax expertise could help me here.  

    My wife and I have 16 rental units in Kentucky and although we have an on the ground handyman we mange financial things remotely.  

    We are living in Phuket Thailand currently and this year I utilized the Foreign Earned Income Exclusion to not pay taxes on the first 120k of income.  any income over that which is a combination of W2 and rental income is subject to taxes starting at zero.  so this eliminates taxes on the TOP end of income.  (if I made $200k I would be taxes on 80k after taking the standard deduction and child tax credits, etc.  no AMT or anything.  

    Also, I have a 10 year visa for Thailand which excludes me from paying any taxes on income or wealth here in Thailand.  so no local taxes. 

    The question is, my wife and I are both able to take the FEIE if we are both working.  My W2 income takes all my FEIE, can I have our rental property business expense her management at $100k?  this would have the rentals break even on my income, and her 100k of income would be untaxed under the FEIE.  

    is this possible?  She and I jointly own about 10 units while the rest are under my name.  No leverage, not much in the way of repairs as they are all rehabbed with long term tenants.  Low cost basis so the depreciation is not high. 

    I don’t have much to offer on that front, but I just wanted to say hi to the famous @Judd Campbell! If you ever decide to list those properties for sale on the open market, you know who to call. I got some really great investor programs. ;)


    0Reply
  • Judd Campbell
    OP
    Georgetown, KY · Member since 2014 · 179 posts · 55 votes
    2y

    Ha! Chasing the distressed landlord overseas!  I am debating selling one but it is Owen county @James Wilcox

    I can inquire with my tax team but wanted to hear from the experts here with any advice as well. I ended up getting a state tax refund this year from Kentucky.  

    1Reply
  • Jason MalabuteBusiness Member
    Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 897 votes
    2y

    Judd, your question touches on complex tax issues, especially regarding the Foreign Earned Income Exclusion (FEIE) and managing U.S. rental properties from abroad. Since U.S. rental income is classified as U.S.-sourced, it doesn’t typically qualify for the FEIE, regardless of where you or your wife manage the properties.  To navigate these complexities and ensure you’re optimizing your tax strategy, it would be wise to consult a tax professional who specializes in international taxation and U.S. real estate.

    Malabute & Company CPAs525 Reviews
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    0Reply
  • James WilcoxBusiness Member
    Real Estate Agent · Bowling Green KY ~ Lexington, KY · Member since 2015 · 1k+ posts · 600 votes
    2y
    Quote from @Judd Campbell:

    Ha! Chasing the distressed landlord overseas!  I am debating selling one but it is Owen county @James Wilcox

    I can inquire with my tax team but wanted to hear from the experts here with any advice as well. I ended up getting a state tax refund this year from Kentucky.  

    Licensed in the state of Kentucky. Owen County not a problem. :)

    Congrats on that state tax refund. 

    REI James w/ eXp Realty54 Reviews
    WebsiteView Page
    0Reply
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