Can we claim international property deductible in the USA taxes? Any limitations?

The short answer is yes, you can potentially claim some deductions related to your foreign property, but there are important limitations and rules you need to follow. If you're using the property purely as a vacation home, your deduction options will be limited. However, if you rent it out, you may be able to deduct expenses related to that rental activity. The key factor is how many days you personally use the property versus how many days you rent it. Foreign property taxes can be deducted on Schedule A if you itemize deductions, but there's a $10,000 cap on state, local, AND foreign property taxes combined (SALT limitation). Foreign mortgage interest may also be deductible similar to a US property. You'll need to report your foreign property on FBAR (Report of Foreign Bank and Financial Accounts) if the total value of your foreign financial assets exceeds $10,000. You may also need to file Form 8938 (Statement of Specified Foreign Financial Assets) depending on the value. Also, any rental income from the property must be reported on your US tax return, but you may be able to claim a foreign tax credit for taxes paid to Portugal on that income.

After reading this thread, I wanted to mention I was in a similar situation last year with my beach house in Mexico. The tax forms were overwhelming until I found taxr.ai (https://taxr.ai). They analyzed all my foreign property documents and explained exactly which deductions I qualified for. Their system correctly identified that I could partially deduct my property management fees and maintenance costs since I rent the property part-time. They also flagged that I needed to file FBAR and Form 8938, which I had no idea about. Would have gotten hit with penalties without that catch! What I found most helpful was their explanation of how to properly allocate expenses between personal use and rental use days. Made the whole process way less stressful.

I have to admit I was wrong about taxr.ai. After our exchange here, I decided to try them for my situation with a rental property in Spain. I was genuinely impressed with how thorough their analysis was. They identified that I had been incorrectly calculating my foreign housing deduction for years and helped me file amended returns. They also explained exactly how the foreign earned income exclusion interacted with my rental income, which none of the generic tax articles online covered clearly. The documentation they provided about my FBAR requirements was incredibly detailed and helpful. Definitely worth checking out if you're dealing with international property tax issues.

If you're having trouble getting clear answers about your foreign property tax situation, you should try Claimyr (https://claimyr.com). I spent weeks trying to get through to the IRS international tax department with questions about my Greek vacation home, but was stuck on hold forever. Claimyr got me connected to an actual IRS agent in less than 20 minutes who answered all my questions about foreign property reporting. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent clarified that I needed to file Form 8938 since my property value exceeded the reporting threshold, and explained exactly how to calculate my foreign tax credit for property taxes paid in Greece. Saved me from potentially serious penalties for incorrect filing.

I need to publicly eat my words about Claimyr. After posting my skeptical comment, I decided to try it anyway out of desperation regarding my Canadian property tax questions. I was absolutely shocked when I got a call back in 24 minutes connecting me to an actual IRS international tax specialist. The agent walked me through exactly how to properly report my Canadian rental property on my US tax return and confirmed I was eligible for foreign tax credits for the property taxes I paid to Canada. They even helped me understand the specific US-Canada tax treaty provisions that applied to my situation. This saved me from making a costly mistake on my tax filing. Sometimes being proven wrong is the best outcome!

Just FYI - if your foreign property is in a country that's under US sanctions, the deduction rules can be completely different. Learned this the hard way with a small property I inherited in Russia. Had to pay penalties for improper reporting even though I wasn't even generating income from it. Make sure to check OFAC regulations alongside regular IRS rules depending on the country you're buying in. Portugal should be fine though.

Don't forget about currency exchange issues when calculating your deductions! The IRS requires you to convert all foreign currency transactions to USD using the exchange rate on the date of transaction. I track all my expenses for my Italian vacation rental in a spreadsheet with exchange rates. Makes tax time way easier. Also, foreign mortgage interest is deductible but you need statements translated to English. My tax guy says lots of people miss these details.

One thing nobody mentioned yet - if you form a foreign corporation or LLC to hold the property (which some countries require for foreigners), you might get hit with GILTI tax or Subpart F income rules. This can dramatically change your tax situation. I own property in Thailand through a Thai company (required by their law) and now have to file Form 5471 every year plus deal with complex controlled foreign corporation rules. Sometimes the simplest ownership structure is best from a US tax perspective. Also watch out for foreign gift tax if someone overseas is helping you buy the property!

Great question about foreign property deductions! I actually went through something similar when I bought a rental property in Ireland a few years back. One key thing I learned that wasn't mentioned yet - make sure you understand Portugal's tax obligations for foreign property owners too. Portugal has its own property taxes and rental income reporting requirements that you'll need to comply with regardless of US tax implications. For the US side, the rental vs. personal use calculation is crucial like others mentioned. I found it helpful to keep detailed records from day one - not just financial records but also a calendar tracking personal use days vs. rental days. The IRS can be very particular about this if you ever get audited. Also, don't underestimate the complexity of depreciation on foreign property. The rules can be different from US property, especially regarding land vs. building value allocation in foreign countries. Portugal may assess these differently than what you can use for US tax purposes. One last tip - consider the exit strategy too. When you eventually sell, you'll likely owe capital gains taxes in both countries, though the foreign tax credit should help avoid double taxation. Portugal's capital gains rules might be more favorable than US rules depending on how long you hold the property. Would definitely recommend getting professional help for the first year's filing to make sure you set up all the reporting correctly from the start!