I'm a newbie from California. I have been reading a lot of books and listening to a lot of different podcast. I'm looking to buy single family properties in Texas. My thought is to buy and hold these properties for a long period of time.
Does anyone know if Texas has an investor tax for out of state investors? If anyone knows the answer or can point me in the right direction to find it myself that would be great? Thank you in advance.
Hi @David Fawcett
Welcome to Biggerpockets!
Texas is one of the states that does not impose an income tax.
However, the IRS and States tax residents on world-wide income.
As a California resident you would include the income/loss earned from your rental property in Texas.
Furthermore, if you operate as a separate entity(LLC Corp etc) you may be subject to Texas' franchise tax.
More information of the Franchise tax can be found on the website below
What area of Texas are you looking at?
Thank you for the information. I heard someone talking about Texas charging an out of state investor tax, but I couldn’t find much on the subject. Thank you for the link.
I’m leaning toward the Dallas Fort Worth area, but I’m not locked into that. Lol. I’m always open to ideas or other people’s opinions.
Texas actually does not charge an out of state investor tax.
if you own a property in your personal name in Texas - you won't pay an income tax.
however, you will pay an income tax to CA for your income in Texas.
Normally California will give you a credit for taxes paid to another state(but in this instance since Texas wont charge you a tax - california wont give you a credit.)
I was in Dallas about 6 months ago. Its a great city and it seems like business is still booming
Welcome to the community David.
I am also looking for buy and hold SFR in Texas. Mostly on north Dallas - Frisco, McKinney etc.
Please let me know which specific area are you looking at?
@Basit Siddiqi. Thank you for all the information. It has been a great help!
@Kulin Dakwala. I haven’t really targeted a specific area yet, just a general area. Why do you like the area to the north do Dallas?
Because of economy and job growth. Please refer below:
I am still thinking and open for any other market as may not get decent cash flow here.
Wow. Thanks for the article. I haven’t had a chance to read on BP too much. I’m gonna have to take a couple weeks and just read articles
There is no investor tax for out of state investors here. No state income tax. Property taxes run around 2.5% for most areas in Dallas/Ft Worth.
Kevin, thank you sir! Based on some info that was provided in this post I’m actually looking towards the areas that you are from. Do you have any insight that you would like to share that could help me with location or areas?
Thank you in advance
Hi there. My wife Becky is a DFW realtor with KW McKinney and has experience working with out of town investors/buyers. If you send a colleague request I can send you her contact info. FYI we own rental SFRs in the area as well. Good luck in search! Dale
If you create an LLC or corp, Texas has a franchise tax. You'll never pay it because the first $1.5Million is exempt. But you do have to file a form every year with the Comptroller.
Mr Tucker thank you and I will send you a request, just as soon as I figure out how to do so. Lol
Mr Heller thank you for the information. Once again I thank everyone for the information it’s a great help to a new person.
There’s no income tax for Texas but your property taxes will be high. Very business friendly city and should continue seeing good growth. Increased prices will
Probably make it harder to find deals.
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