Tax question for out of state property.

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Tax question for out of state property.

Kristopher Kelly
Investor · Fort Walton Beach. FL · Member since 2020 · 87 posts · 42 votes

Hello All Of BP,

I will keep this short and sweet. I am moving out of state (Delaware) and moving to a new state (Florida) and am leaving a condo that I am renting out. The condo will rent for $300 pure cash flow once rent it which I am excited about. My question is how do the taxes work on a rental that will eventually be out of state for me? And how would you set it up? For example, should I talk with a CPA and open an LLC, and put the condo into the LLC? Or can you obtain tax benefits without an LLC? I know this might be easy questions but I have never heard it talked about. Also, do you open a separate bank account and run all funds for the property in that account or is there a different way? I know there is a bunch of questions but I appreciate the help if anyone seeing this post has insight on this.

Thank you all for the help and hopefully hear from yall soon!

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  • John Sharpe
    Crestline, CA · Member since 2018 · 63 posts · 70 votes
    4y

    I own an out-of-state condo that is just held in my own name and I decided it wouldn't be worthwhile to set up an LLC for it. Yes you get all depreciation write-offs etc as just an individual holder, and note your accountant will likely need to file a Delaware tax return each year for your rental income in Delaware, but this is usually easy and cheap. I keep a separate bank account for each property, I just think it's easier that way and it's fun to see the account fill up.
    A nice little perk:  travel expenses for you to go back to Delaware to check on your property are deductible, which could be handy if you plan to return to the area often.

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  • Kristopher Kelly
    OP
    Investor · Fort Walton Beach. FL · Member since 2020 · 87 posts · 42 votes
    4y

    @John Sharpe

    Thank you for the help, sir! I will do the same then. I will contact a CPA that is familiar with this. 

    Thank you for your help and have a great rest of your week!

    -Kristopher Kelly

    1Reply
  • Tyler Peitzmeier
    Investor · Newport Beach, CA · Member since 2019 · 68 posts · 66 votes
    4y

    Hey Kristopher,

    You're CPA will be able to get you set up for the best strategy. Just let them know what it is you are trying to achieve and they should help you build a strategy to best suit you. It is a great question, just surround yourself with experts and they will help you grow.

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    4y

    @Kristopher Kelly

    Going forward, you will need to report the rental income on your Federal return + Delaware non-resident return.

    Just because you have $300 of cash-flow a month, hopefully you don't have to pay taxes on it with depreciation.

    Talk to your CPA.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
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