Real Estate Investor Tax Services: Rentals in Illinois, Canada and India

Real estate investor tax services cover the full life of a property: buying and holding it, reporting the rent each year, and paying the right tax when you sell. Our firm prepares the U.S. returns for investors with rentals in Aurora and the Chicago suburbs, and for U.S. taxpayers who also own a flat in Pune or a condo in Toronto. We handle the U.S. side and coordinate with your Canadian CPA or Indian CA so a sale abroad is reported consistently in both places.

Who needs real estate investor tax services?

• Landlords with one or more rentals in Aurora, Naperville, Joliet or elsewhere in Kane, DuPage, Will and Kendall counties.
• U.S. residents with property in India who rent it out or plan to sell.
• Canadians who own U.S. rental property, and U.S. citizens who own property in Canada.
• Investors who are weighing a like-kind exchange, a cost segregation study or a move from rental to personal use.
• Heirs who inherit property in more than one country.

How U.S. rental income is taxed

You report rents and expenses on Schedule E. Property qualifies as residential rental property when 80% or more of the gross rental income comes from dwelling units, and the building is then depreciated over 27.5 years on Form 4562. The IRS does not allow depreciation on land, so every purchase price must be split between land and building.

Rental losses are passive by default. Publication 925 explains that active participation can allow up to $25,000 of loss against other income, reduced by 50% of modified adjusted gross income above $100,000 and unavailable at $150,000 or more. Real estate professionals who perform more than 750 hours of services in real property businesses, and more than half their personal services, can treat rentals as non-passive. Unused passive losses carry forward on Form 8582.

Higher-income investors may also owe the 3.8% net investment income tax when modified AGI is over $200,000 (single) or $250,000 (married filing jointly). For selling, 2025 long-term capital gain rates are 0%, 15% or 20%, with the 15% bracket for a single filer running from $48,350 up to $533,400 of taxable income; the portion of gain from past depreciation is taxed at up to 25%. Selling your main home can allow an exclusion of up to $250,000 (single) or $500,000 (joint) if you owned and lived in it for 24 of the last 60 months. Illinois taxes the remaining gain at its flat income tax rate. See our multistate residency and nexus guide if you own property outside Illinois.

Foreign property and foreign investors

For FIRPTA, the IRS says transferees must generally withhold 15% of the amount realized and remit with Form 8288 and Form 8288-A. A buyer who will use the property as a residence may qualify for an exemption at $300,000 or less, and a seller or buyer can ask for a withholding certificate on Form 8288-B; the IRS normally acts on an application within 90 days of receiving all information. For India, the 12.5% long-term rate follows a 24-month holding period for land and buildings, and buyers deduct TDS on payments to NRIs; your CA confirms current provisions under the Income-tax Act, 2025 transition. See India capital gains for NRIs and TDS on property sale by NRIs.

How the engagement works

1. Consultation. We list every property, who owns it, how it is used and where each owner lives.
2. Written engagement agreement. It sets the scope, the years and the fee basis and is signed before work starts.
3. Document checklist. We send a list for purchases, operations and sales.
4. Preparation. We allocate cost between land and building, set up depreciation, test passive-loss rules and compute state tax.
5. Review. You review the schedule for each property and the effect on your return.
6. Filing. We file the U.S. and Illinois returns and coordinate Canadian and Indian reporting.
7. Follow-up. We track depreciation, carryforwards and sale timing for next year.

Documents to prepare

• Closing statements (HUD-1 or closing disclosure) for every purchase and sale.
• Lease agreements, rent rolls and bank records of deposits.
• Invoices for repairs and improvements, with dates.
• Property tax bills, insurance and mortgage interest statements.
• For foreign property: sale deed, purchase cost in local currency, exchange-rate records and any TDS certificates.

Common situations and fixes

• Depreciation was never claimed. Depreciation reduces your basis whether or not you took it, so missed years still matter; we review how to correct the position.
• Improvement versus repair. We separate deductible repairs from improvements to be capitalized.
• Rental turned personal use. Personal-use days can limit deductions; see Publication 527 for the vacation home rules.
• Inherited property abroad. Basis and reporting depend on the country and the date of death. We coordinate with your CA.
• Exchange-rate gains. A sale in rupees or Canadian dollars is converted to dollars at the relevant dates, which can change the U.S. gain.

A worked example

Anil buys a duplex in Aurora for $360,000, of which $60,000 is land, so the building basis is $300,000. Annual depreciation is about $10,909 ($300,000 divided by 27.5), ignoring first-year timing. Rents are $30,000 and expenses other than depreciation are $14,000, so taxable rental income is roughly $5,091 on Schedule E. Because his income is below the phase-out, a small loss in a slow year could be used against other income. In year eight he sells for $480,000. Part of the gain equals depreciation taken, which is taxed at up to 25%, and the rest at capital gain rates. If Anil were a Toronto resident, the same sale would also involve FIRPTA withholding and a Canadian report. He may also own a Pune flat, handled with his Indian CA.

How we can help

From our Aurora, Illinois office we work with landlords and cross-border investors across the Fox Valley. We handle the U.S. side and coordinate with your Canadian CPA or Indian CA. See also foreign account and asset reporting, bookkeeping for rentals and the capital gains comparison. Our full list of services is on the services page.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.