The default: 30% of gross rent
The IRS explains that income from U.S. real property owned by a nonresident alien is taxed at 30%, or a lower treaty rate, when it is not effectively connected with a U.S. trade or business. That tax applies to the gross rent, without deductions for expenses.
IRS Publication 515 (2026) says withholding agents must withhold on rents from U.S. real property held for the production of income unless the foreign payee elects to treat the income as effectively connected and provides Form W-8ECI. A withholding agent is any person, in whatever capacity, with control, receipt, custody, disposal or payment of the income, so whoever collects or pays the rent should confirm their obligations with a tax professional.[1][2]
The net-basis election
Under IRC 871(d), a nonresident alien who holds U.S. real property for the production of income can elect to treat all income from that property, including rents and gains from sales, as effectively connected. If made on time, the owner can claim deductions attributable to the property, and net income is taxed at graduated rates. The election does not otherwise make the owner engaged in a U.S. trade or business.
You make the election by attaching a statement to Form 1040-NR (or an amended return) listing your U.S. real property interests and income, and you must file Form 1040-NR every year while it is in effect. If a return is not filed within 16 months of its original due date, the IRS says deductions are generally not allowed unless a waiver is granted. The election stays in place until revoked.[1]
Florida obligations still apply
Owner nationality does not change Florida's rental rules. The 6% transient rental tax under section 212.03 must be remitted by the owner, lessor or person receiving the rent, and short-term rentals may also need a DBPR license and county tourist tax registration. In Fort Lauderdale, a foreign entity that owns a vacation rental must register with Florida's Division of Corporations before applying to the city.
Treaty rates, entity structures and later sales involve separate rules, so work with a CPA experienced in international tax before collecting the first rent payment.[3][4]
Key takeaways
- Without an election, a nonresident's U.S. rental income is taxed at 30% (or a treaty rate) on gross rent.
- Withholding agents must withhold on that rent unless they receive a valid Form W-8ECI.
- The IRC 871(d) election allows deductions and graduated rates but requires filing Form 1040-NR every year.
- Late returns can cost the owner the right to deduct expenses.
- Florida rental taxes, licenses and local registrations apply regardless of where the owner lives.
Sources
- [1]IRS — Nonresident aliens: real property located in the U.S.
- [2]IRS — Publication 515 (2026), Withholding of Tax on Nonresident Aliens and Foreign Entities
- [3]Florida Legislature — 2026 Florida Statutes, s. 212.03 Transient rentals tax
- [4]City of Fort Lauderdale — Vacation Rental Registration
Reviewed October 11, 2026. General real-estate information for Florida, not legal, tax, lending or insurance advice. Laws, rates and deadlines change — confirm property-specific facts with the agency cited, a Florida real-estate attorney, CPA or licensed insurance agent.