Americans planning a year abroad frequently evaluate whether renting or selling a second home offers the best tax outcome. Because the Internal Revenue Service taxes US citizens and residents on worldwide income, both rental income and any eventual sale of real property must be reported, regardless of where the owner temporarily relocates. That rule applies even when the homeowner moves to Europe and maintains no physical presence in the United States during the tax year. The tax consequences differ sharply between renting and selling, and the choice can influence annual taxable income, long-term tax exposure, and the cost of managing the property from overseas.
