Don't know if you got your answer on this. I would get a second opinion from a different tax person. From what I have read the excise and franchise tax are only on entities (LLC, S-corp, etc), and if it's a LLC that's family owned (95%) and "derives substantially all of its income from passive investments" (66.7%+) then you can apply for a waiver of the franchise and excise tax. It's called FONCE (family owned non-corporate entity) if you want to look it up and read what I read.
I believe there is no tax on rental income. We have no income tax in Tennessee (on wages anyway). I only have one rental and I've only had it a little over two years now so hopefully a more expert opinion will be given than mine. I'm sure I've not paid any tax to the state so I look forward to hearing what others say!
@Juliette V.: @Jon Hopper has it correct, we have no state income tax here, although you being a resident of CA, you may very well have some tax liability on rental income from your out-of-state holdings when you file your own return, but you should double check with an accountant in your home state on that one... but as for TN, you're clear here. Now if you were operating a short term "vacation rental" you may have business taxes to file and of course all hotel/motel operators must collect and pay Sales & Occ Taxes + County Taxes and here in Dav Co, a Privilege Tax (for the new Convention Center).
Damien, thanks. That's what I thought and read, but wanted to double check on here...because I realize it can get tricky. I know this may be a hard find and something that rarely comes across...but if so please keep me in mind....a home with a fully equipped guest house? Could be perfect additional rental....
I live in PA and have a rental property in TN. I know there is no income tax but to be sure I called a local tax person and they are saying I owe Franchise/Excise tax. Called the state and they said yes, but I could request for an exemption. Any one have similar experience?
Don't know if you got your answer on this. I would get a second opinion from a different tax person. From what I have read the excise and franchise tax are only on entities (LLC, S-corp, etc), and if it's a LLC that's family owned (95%) and "derives substantially all of its income from passive investments" (66.7%+) then you can apply for a waiver of the franchise and excise tax. It's called FONCE (family owned non-corporate entity) if you want to look it up and read what I read.