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My wife and I acquired a property in the US in 2016 with a US mortgage. We started renting it that year and have been managing it ourselves since then (no rental management company). We are both owners of that property and filled jointly as "US resident for tax purposes" for the year 2016.

In September 2017 we will switch to a US management company. Also for 2017 we will be considered non-resident aliens (we are both non US citizens). We will have no US income except for a rental income to which we would like to deduct the usual expenses (depreciation, mortgage interest, etc.). What would be the detailed procedure to do this, and would we be able to fill jointly?

Below is what I gathered from all my research but I am really unsure of my conclusions:

  1. We have to send forms W-8ECI to the rental management company (my wife and I must send one separately) when we switch to them in September 2017
  2. In April 2018 we will have to fill the form 1040NR and cannot fill it jointly (is that true?). We just need to use our SSN as ITIN (as we did for 2016 as US residents)
  3. We should be able to deduct things like depreciation, mortgage interest, etc. although important complications will arise from filling separately. What are these complications?
  4. I have no idea what do we have to do for state taxes (MN in this case)

Any help would be truly greatly appreciated.

  • Note the deduction is "mortgage interest", not "mortgage". – TTT Jun 19 '17 at 15:47

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