Taxes for investing out of state

Member since 2023 · 13 posts · 7 votes

Hello everyone!!

We live in NYC and interested in investing in the Cleveland market but wanted to ask advice on tax implications??
Do we pay an out of state tax on top of standard state taxes due to living in for example NYC?

Apologize if this has been answered prior and appreciate the help!

Katie & Michael

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Patricia Steiner

Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes

Gotta google - there's a lot on this out there. Here's one:

https://www.stessa.com/blog/ow...

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Patricia Steiner
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
3y
Gotta google - there's a lot on this out there. Here's one:
https://www.stessa.com/blog/ow...
2 Reply
Joseph PalmieroBusiness Member
CPA · PA · Member since 2023 · 151 posts · 115 votes
3y
You will need file a Ohio tax return to report and pay tax on that rental income. Then you will receive a credit for that tax on your New York income tax return.
[email protected]814-720-2493
Palmiero CPA, LLC51 Review
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Michael Meates
OP
Member since 2023 · 13 posts · 7 votes
3y
Quote from @Joseph Palmiero:

You will need file an Ohio tax return to report and pay tax on that rental income. Then you will receive a credit for that tax on your New York income tax return.
Appreciate your help!!!
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Account Closed
Columbus, OH · Member since 2023 · 427 posts · 254 votes
3y
Income taxes are based on where the income is generated- properties in Cleveland will pay Ohio taxes, NYC will pay NY taxes, etc.
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Chris McCormack
Accountant · Edina, MN · Member since 2020 · 172 posts · 97 votes
3y
Owning real estate usually translates to losses on your tax return. You are liable for taxes on income generated in another state but if you generate a loss, you could avoid them completely.
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Don Petrasek
Real Estate Agent · Westlake, OH · Member since 2014 · 186 posts · 165 votes
3y
Highly likely that you will also have to pay local taxes here in addition to any state tax obligations....its best to consult a tax professional on this as it can get complicated. Also consider the extra cost of having your returns done for another state/city in your ROI estimate.
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Chris Picciurro
Accountant · Franklin, TN · Member since 2023 · 204 posts · 91 votes
3y
Good morning Michael - as a resident of NY, you will pay tax on all your income. You will also file a state and local (if applicable) return in Ohio (not fun due to school district tax returns). If you owe state tax in Ohio, you will receive a tax credit on your NY return. Essentially, you are not double taxed. At the end of the day you pay tax on all income based on the NY state tax rate.
NY tax guidance
That said, if you have rental properties taxable income should be very low due to depreciation. Just make sure you CPA understands that states handle bonus depreciation differently. Not all states honor the federal tax deduction rules.
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Curt Riffel
Accountant · Dallas, TX · Member since 2016 · 161 posts · 75 votes
3y
City of Cleveland -Central Collection Agency - do not forget local taxes also.
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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
3y
Quote from @Michael Meates:

Hello everyone!!
We live in NYC and interested in investing in the Cleveland market but wanted to ask advice on tax implications??
Do we pay an out of state tax on top of standard state taxes due to living in for example NYC?
Apologize if this has been answered prior and appreciate the help!

Katie & Michael

call your accountant, DO NOT take tax advice online,
1 Reply
Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
3y
Ohio is a unique state that they have a lot of locality returns.

Therefore, if you invest in Cleveland, you will also have to file a locality return with Cleveland.

Best of luck
[email protected]917-280-8544
Basit Siddiqi CPA4.880 Reviews
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