Forms included in a real estate federal tax return
Federal tax filing in general is a complicated process. US Residents can use online software or hire an accountant. NRA can not file online, and tax preparation software cannot be bought outside the US. They can either fill the form by themselves or hire an accountant.
For our purpose, at least three set of forms always need to submitted. These are, in top down order:
- main income tax form: form 1040 for resident 1040NR for non resident
- real estate net income computation: form 1040 schedule E
- house depreciation computation: form 4562
The state income tax depend on the state where the property is located. They refer to federal tax income forms, so it is necessary to filled federal forms first.
For filing the taxes, the depreciation form needs to be filled first, its result is an input in form 1040 schedule E which needs to be filled second. The form 1040NR is filled last. You can check the links to find explanations.
Additional forms that may apply
- The alternative minimum tax (AMT) is relevant for income that arises from activities that receive a favorable tax treatment. While residential rental activity does not give rise to AMT liability. I am not sure whether some capital gains may give rise to such liability, I would seek advise on this when I sell a property. See form 6251.
- If the net result from real estate operation is negative, the form 8532 needs to be used.
- capital gains declaration in case of sale: form 8949