My wife is a non-resident alien and our family of four live currently overseas. I own a mortgage-free property in CA and it is used as a rental. We file tax seperately, in other words she doesn't pay US tax on her income. And my tax pay to IRS is minimal since I am not working.
We are thinking about buying a second property in southern CA as an investment/rental as we probably won't move back to the States in the immediate future. We will get a mortgage loan about 400K, with down payment roughly the same amount - mainly from her saving). Is it correct that we/she won't get the benefit of deduction on real estate tax and mortgage interest payment because it is rental and her status, right?
- What would be the tax concequences for me and my wife's taxes then? Is she subjects then to IRS and CA-State tax and need to file tax?
- The main idea is profit from the current buyers market. Is this a SILLY idea? Or should we only consider this after we move back in 3 to 5 years?
The only way she could "benefit" from the deductions is if she had some income subject to taxation by the IRS. If she is on the title she will have to file US returns, whether you two file jointly or separately is another question best answered by your CPA or tax preparer. As to how it will affect her tax picture, again that friendly CPA or tax preparer is your friend there too.
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