Taxes for investing out of state
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
Gotta google - there's a lot on this out there. Here's one:
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.
Quote from @Joseph Palmiero:Appreciate your help!!!
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.
Income taxes are based on where the income is generated- properties in Cleveland will pay Ohio taxes, NYC will pay NY taxes, etc.
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.
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.
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.
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.
City of Cleveland -Central Collection Agency - do not forget local taxes also.
- Real Estate Consultant
- Cleveland
- 3,027
- Votes |
- 5,168
- Posts
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,
- Accountant
- New York, NY
- 3,071
- Votes |
- 7,500
- Posts
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
-
CPA
- Basit Siddiqi CPA, PLLC
- 917-280-8544
- http://www.basitsiddiqi.com
- [email protected]