NJ Resident looking to buy first house in Philly

Philadelphia, Pennsylvania
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NJ Resident looking to buy first house in Philly

Marek Los
Member since 2020 路 23 posts 路 2 votes

Hi there!  I currently have one house that I house hack in Trenton, NJ and so please bear with me but I am not familiar with the Philly side of things at all.  I really like the Philly market (specifically Port Richmond) and would like to buy an investment property here, but don't know how this would work with the Philly city tax.  I don't intend to live inside the house, just simply rent out the unit and get some cash flow from it.  If I remain a NJ resident and this is clearly an investment property, would I be liable to pay the city tax on my income?  Just to be clear, I have no problem paying my fair share of any profits to the city but I don't want to become classified as a Philly resident so that my regular W2 gets hit with the city tax, that's my primary concern.  Sorry for the dumb question but I kept looking around the Internet for answers and didn't see anyone with quite the same situation.  Thanks!

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Basit SiddiqiBusiness Member
Accountant 路 New York, NY 路 Member since 2015 路 8k+ posts 路 3k+ votes
3y

If you are not a resident or working in Philadelphia, you won't be accessed Philadelphia city taxes.

Philadelphia considers rentals, doing business within Philadelphia.
As a result, you may be required to file a Business Income Receipts Tax(BIRT) and a Net Profits Tax(NPT) with Philadelphia.

Best of luck.

[email protected]917-280-8544
Basit Siddiqi CPA4.979 Reviews
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  • Monica Williams
    Real Estate Agent 路 Philadelphia, PA 路 Member since 2023 路 81 posts 路 40 votes
    3y

    Hi @Marek Los, in Philly, the city has a wage tax on residents and non-residents who work in the city. As a NJ resident, if you solely own an investment property in Philly and don't live there, you generally wouldn't be considered a resident for tax purposes. So it shouldn't effect your W-2 or income, you would just need to claim any income on the property when you file just like any other investment. I'm an agent in the area, if you ever have any questions about the area feel free to reach out!

    1Reply
  • Alan AsriantsBusiness Member
    Real Estate Agent 路 Philadelphia, PA 路 Member since 2019 路 1k+ posts 路 1k+ votes
    3y

    Hey Markek, If you buy an investment property as an investment your W2/1099 should not be affected.

    If you establish primary residence and you declare that when submitting taxes, then you would pay, PA and Philly tax.  

    It all depends how you purchase the property and where you primary residence is

    You will however have to pay tax to the city from the income you earned from the property 

    I would recommend talking to a CPA as well 

    [email protected]267-767-0111
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  • Eric Greenberg
    Investor 路 Philadelphia, PA 路 Member since 2019 路 618 posts 路 430 votes
    3y

    Im bullish on Port Richmond and what Richmond St will become in the next couple years. Just make sure to stay on the east side of Aramingo 馃槉

    2Reply
  • Marek Los
    OP
    Member since 2020 路 23 posts 路 2 votes
    3y
    Quote from @Alan Asriants:

    Hey Markek, If you buy an investment property as an investment your W2/1099 should not be affected.

    If you establish primary residence and you declare that when submitting taxes, then you would pay, PA and Philly tax.  

    It all depends how you purchase the property and where you primary residence is

    You will however have to pay tax to the city from the income you earned from the property 

    I would recommend talking to a CPA as well 

    Thank you!  This makes a lot of sense, and in line with what I was thinking.  I have no problem paying my fair share of taxes to the city for my investment there, but I didn't want to transition to being a resident of Philly so that my entire W2 is now subject to this city tax.  Love Pennsylvania taxes compared to NJ, but once you throw in that city tax, they really are pretty much the same.  But I will certainly talk to a CPA as I acquire more properties to figure out the best way to set all this up.  If anyone has a good CPA in the Philly market (familiar with the city tax, especially), please feel free to recommend them.  Thanks!


    0Reply
  • Basit SiddiqiBusiness Member
    Accountant 路 New York, NY 路 Member since 2015 路 8k+ posts 路 3k+ votes
    3y

    If you are not a resident or working in Philadelphia, you won't be accessed Philadelphia city taxes.

    Philadelphia considers rentals, doing business within Philadelphia.
    As a result, you may be required to file a Business Income Receipts Tax(BIRT) and a Net Profits Tax(NPT) with Philadelphia.

    Best of luck.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
    View Page
    2Reply
  • Marek Los
    OP
    Member since 2020 路 23 posts 路 2 votes
    3y
    Quote from @Basit Siddiqi:

    If you are not a resident or working in Philadelphia, you won't be accessed Philadelphia city taxes.

    Philadelphia considers rentals, doing business within Philadelphia.
    As a result, you may be required to file a Business Income Receipts Tax(BIRT) and a Net Profits Tax(NPT) with Philadelphia.

    Best of luck.


     Perfect explanation, thank you so much!

    0Reply
  • Rami Khaldi
    Philadelphia, PA 路 Member since 2022 路 46 posts 路 38 votes
    3y
    Quote from @Marek Los:

    Hi there!  I currently have one house that I house hack in Trenton, NJ and so please bear with me but I am not familiar with the Philly side of things at all.  I really like the Philly market (specifically Port Richmond) and would like to buy an investment property here, but don't know how this would work with the Philly city tax.  I don't intend to live inside the house, just simply rent out the unit and get some cash flow from it.  If I remain a NJ resident and this is clearly an investment property, would I be liable to pay the city tax on my income?  Just to be clear, I have no problem paying my fair share of any profits to the city but I don't want to become classified as a Philly resident so that my regular W2 gets hit with the city tax, that's my primary concern.  Sorry for the dumb question but I kept looking around the Internet for answers and didn't see anyone with quite the same situation.  Thanks!


    Hey Marek! I have a great friend and agent who helped me find my primary home and my first investment property as well. Has experience working with investors. DM me if interested!

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