Do You Pay U.S. Tax on Rental Income From Philippine Property?
Yes. The IRS (Publication 54) says U.S. citizens are taxed on worldwide income, so rent from a Philippine condo goes on your Form 1040 even though the Philippines also taxes it. The usual way to avoid double tax is the Foreign Tax Credit (Form 1116); the Foreign Earned Income Exclusion does not apply because rent is not earned income.
The filing stack
| Item | What it is |
|---|---|
| Form 1040 with rental schedule | Report rent and deduct expenses, as for U.S. rentals |
| Form 1116 | Credit for Philippine income tax paid on the same income |
| Philippine return (BIR) | Philippine tax on Philippine-source rent |
| FBAR (FinCEN 114) | Required when foreign financial accounts exceed $10,000 in total at any time in the year |
| Form 8938 (FATCA) | Required above higher thresholds that depend on where you live and how you file; check the IRS instructions |
When you sell
Gains are taxable in the U.S., and the Philippines typically charges 6 percent capital gains tax on the sale of property by an individual. A U.S. like-kind (1031) exchange cannot be used for Philippine property. Details: tax strategy for Philippine property and the tax treaty.
Extension: taxpayers living abroad on the regular due date generally get an automatic two-month extension to June 15 to file, but tax owed is still due April 15 for interest purposes. General information, not legal, tax or investment advice. Current as of October 2026.
More answers
- Best Time to Live in the Philippines to Escape U.S. Winter
- Can Snowbirds Use the Foreign Earned Income Exclusion? The 330-Day Rule
- Does Medicare Cover You in the Philippines? What to Do Instead
- How Long Can an American Stay in the Philippines? Visa-Free, Extensions, SRRV
- Is There a U.S.–Philippines Tax Treaty? What It Does and Doesn’t Do
- How to Check If a Philippine Condo Is Still Open to Foreign Buyers (40% Cap)
- Cost of Living in the Philippines for a Retired Couple in 2026
- Can You Collect U.S. Social Security While Living in the Philippines?
- Can a Foreigner Own Land in the Philippines? The Legal Routes
- Is Pasalo (Assume Balance) Safe? What to Check Before You Pay
- Does the Maceda Law Apply to Rent-to-Own in the Philippines?
- Can Foreigners Lease Land for 99 Years in the Philippines? (RA 12252)
Sources: IRS Publication 54 (Tax Guide for U.S. Citizens and Resident Aliens Abroad); IRS Form 1116 and Form 8938 instructions; FinCEN FBAR guidance; Taxes for Expats Philippines guide; BIR capital gains guidance. Confirm with a cross-border CPA. Current as of October 2026.
Frequently asked questions
Does the FEIE cover rental income?
No. It applies to earned income such as wages and self-employment income, not rent, dividends or gains.
Do I pay tax twice on Philippine rent?
Not usually. You report it in both countries, then claim the Foreign Tax Credit on Form 1116 for the Philippine tax paid.
Do I need to file an FBAR?
Yes if your foreign financial accounts total more than $10,000 at any time in the year, including Philippine bank accounts.
Is the capital gains tax on a Philippine sale 6 percent?
For an individual selling real property that is a capital asset, the Philippine rate is typically 6 percent of the higher of selling price or zonal/fair market value. Confirm with a Philippine tax adviser.
