Depreciating Foreign Property

I am involved in a pre-construction deal overseas. Delivery will be in three years and I intend to lease it out for income.

My question is about depreciation on my US tax returns. Does it apply to foreign investments? If so, when does it begin? Now, as the property is being constructed, or upon delivery of the premises? Is the term 39.5 years?

Thank you.

My tax library is down so I can’t check your economic life, but you do get to depreciate foreign real estate… but you use a longer life than is used for US real estate. I sort of recall the life is 40 years… but your number may be right, too.

BTW, the irs publication that covers depreciation is number 946… but I couldn’t find the answer to your question there… sorry.

Thank you, Steve.

you’re welcome. :biggrin

This isn’t directly related to your question, but you need to keep on top of the reporting requirements for offshore investments. Fines and penalties are punitive even for innocent mistakes.

Yeah, that’s a good point. E.g., if you’ve got a financial account in another country, you must file a TD F 90-22 every year. (Often, if your accountant knows what’s what, he or she will do this for you as part of the tax return.)


Any suggestions for resources on getting a grap on offshore tax issues? Are you familar with Vernon Jacobs?