Rental income from real property located in the United States and the gain from its sale will always be U.S. source income subject to tax in the United States regardless of the foreign investor’s personal tax status and regardless of whether the United States has an income treaty with the foreign investor’s home country.

The method by which rental income will be taxed depends on whether or not the foreign person who owns the property is considered “engaged in a U.S.

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You may choose any record keeping system suited to your business that clearly shows your income and expenses. It can be as simple as a calendar showing business income earned each day and business expenses paid each day or they may be a detailed accounting system. The system of records should include enough information to correctly determine gross receipts, business expenses incurred and the purchase price of assets acquired for use in the business. The taxpayer’s books and records should have supporting documents.

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