Keeping or renting out your US home from abroad

Renting out the house back home can cover the mortgage and keep a foot in the US market, but it turns you into a long-distance landlord with new insurance, tax and lender obligations.

The short version

Tell your insurer. A homeowners policy assumes you live there. Renting it out usually means switching to a landlord (dwelling) policy, which costs more [4].
Check your mortgage. Standard loan contracts commonly ask you to live in the home for at least a year after closing; after that, renting it out is generally allowed [5].
Hire a property manager unless a nearby relative truly wants the job. You can't fix a burst pipe from Berlin.
The rent is taxable in the US. You report it on Schedule E and depreciate the building over 27.5 years [1].
Watch the home-sale clock. To keep the USD 250,000 or USD 500,000 home-sale exclusion, you generally need two years of living there in the five years before you sell [2].

Your three options at a glance

	Sell before you go	Rent it out	Keep it empty
Cash flow	Lump sum now	Monthly rent, minus costs	Costs only
Work for you	Done	Ongoing, even with a manager	Checks, maintenance, insurance
US tax	Home-sale exclusion if you qualify [2]	Rent on Schedule E; depreciation [1]	Little change
Insurance	None	Landlord policy [4]	Vacancy limits on many policies; tell your insurer
Best if	You won't come back to that city	You'll return, or want the long-term gain	You'll return often or soon

The rest of this guide is about the middle column, because that's where most of the surprises are.

Step by step: turning your home into a rental

Read your mortgage paperwork. Find the occupancy clause and confirm you've passed any minimum period.
Call your insurer and switch to a landlord policy that starts the day the lease starts.
Choose a property manager and agree on fees, repair limits and how you'll get reports.
Check local rules. Some cities require rental registration, inspections or a business license. Your manager should know.
Set up money flows. Rent into a US account, mortgage and bills out of it. Keep it separate from your spending account to make tax time easier.
Document the home's condition and value on the day it becomes a rental. You'll need that for depreciation.
Plan your US and state tax filings for the first year of rent.

Your mortgage and the occupancy rule

If you bought with a standard owner-occupied loan, the security instrument commonly says you'll move in within 60 days and live there as your principal residence for at least one year, unless the lender agrees otherwise in writing or circumstances beyond your control arise [5]. Fannie Mae's guide defines a principal residence the same way: a home the borrower occupies within 60 days of signing [6].

What that means in practice:

Lived there more than a year? Renting it out after a genuine move abroad is generally fine, but read your own loan documents and keep the servicer informed of your mailing address.
Less than a year? A job transfer abroad may count as a circumstance beyond your control, but call your loan servicer and get its answer in writing.
Refinancing later? The house will count as an investment property, not a primary residence, which changes rates and limits. See refinancing your US mortgage from abroad.

Landlord insurance

A standard homeowners policy isn't built for a home you rent to others, and an insurer may deny a claim on a house insured as owner-occupied that turns out to be rented [4]. A landlord policy, often called a dwelling or DP-3 policy, typically covers:

The building against covered perils, usually at replacement cost
Other structures, like a detached garage or fence
Liability if a tenant or guest is hurt and sues
Loss of rent if a covered loss makes the house unlivable [4]

It doesn't cover your tenants' belongings, and flood and earthquake coverage are usually separate purchases [4]. Ask tenants to carry renters insurance and show proof at signing. As a ballpark, one industry rule of thumb cited by the Insurance Information Institute is to add about 25% to your homeowners premium [4]. Get real quotes before you set the rent.

If the house will sit empty instead, read your policy's vacancy clause and tell your insurer. Unoccupied homes are a common reason for denied claims.

Property managers

Managing a rental from across an ocean is possible but miserable. Tenants call at 2 a.m. your time, contractors want to be let in, and someone has to show up when the AC dies in July. A good manager typically handles:

Marketing the home, screening tenants and signing leases
Collecting rent and chasing late payers
Repairs, usually up to a dollar limit you set
Move-in and move-out inspections, and the security deposit
Following state and local landlord-tenant law, including evictions

Fees are usually a percentage of collected rent, plus separate charges for finding a tenant or renewing a lease. Compare several local firms, ask for a sample monthly statement, and check that the security deposit is held the way your state requires.

Letting a relative live there at a below-market rent is a common alternative, but it has tax effects: the IRS treats rent below a fair rental price differently, and that can limit your deductions [1].

Taxes on the rent, in brief

Living abroad doesn't change the basic US rules. Uncle Sam still wants his cut of rental income, but you can deduct the costs:

Report rent on Schedule E with your Form 1040 [1].
Deduct expenses such as mortgage interest, property taxes, insurance and management fees [1].
Depreciate the building over 27.5 years. When you convert a home you lived in, the basis for depreciation is the lower of its adjusted basis or its fair market value on the day you start renting [1].
File in the state where the house is, usually as a nonresident, if that state has an income tax.
Your host country may tax the rent too, and you'd then look at the foreign tax credit to avoid paying twice.

The foreign earned income exclusion doesn't cover rent, because rent isn't earned income. Our guide to rental income from a US property goes into the details.

Here's a quick reality check on cash flow. If your rent abroad is AUD 3,000 a month, that's about USD 2,100 at the Federal Reserve H.10 rate of 0.7038 dollars per Australian dollar on October 30, 2026. If the US house nets less than that after mortgage, taxes, insurance and the manager's cut, it isn't paying your rent abroad; it's just paying for itself.

The home-sale clock

If you might sell one day, this matters most. You can exclude up to USD 250,000 of gain (USD 500,000 on a joint return) when you sell your main home, but only if you owned it and lived in it for at least two of the five years before the sale [2].

That creates a window. If you lived there two full years before moving abroad, you generally have up to three years after moving out to sell and still pass the test. Rent it out for four years and the exclusion is usually gone.

Two more points from IRS Publication 523, written for 2025 returns [3]:

Depreciation comes back. You can't exclude the part of the gain equal to depreciation claimed (or allowable) after May 6, 1997. It's taxed when you sell, even if the rest of the gain is excluded.
Some government workers get more time. Members of the armed forces, the Foreign Service, intelligence community employees and Peace Corps workers serving abroad on qualified extended duty can suspend the five-year period for up to 10 years.

Our guide to selling your US home after moving abroad covers the sale itself, and your host country's tax on the gain.

So, keep or sell?

Keep and rent if you're likely to come back to the same area, the rent comfortably covers the costs, and you have a manager you trust. Sell if you won't return, the house needs work you can't supervise, or you'd blow through the three-year window anyway. A US expat tax preparer (or a lawyer) can check your situation and run both numbers before you decide.

Your US home after you move abroad: keep it, rent it or sell it?