Income Tax Filing For Rentals In Multiple States

6 Replies

I looking at buying some rental property out of state.
Both states have income tax.
So at that point am I filing income tax in every state in which I would own property?
And then the whole deal with number of days spent in each state.
I will have a property manager but would visit now and then.

Unless you're spending enough days to trigger some resident status, that part won't matter.  Yes, you will have to file a return in each state where you live or own rentals.   More strictly, you have to file for each state where you have income.  You will only pay taxes on the income earned in each state, though.

Originally posted by @William Morrison:

I looking at buying some rental property out of state.
Both states have income tax.
So at that point am I filing income tax in every state in which I would own property?
And then the whole deal with number of days spent in each state.
I will have a property manager but would visit now and then.

 William,

Although you may not have physical presence in the state, the bricks and mortar of the assets would. As a result, you would be required to file a nonresident return for each state (as Jon mentioned). 

However, Maryland permits certain credits / deductions for taxes paid to other states. To be sure you properly file and receive these credits, make sure you are working with a CPA that understands multi-state taxation. You may also want to be sure you are conferring with attorneys in those states for asset protection reasons, should you be so inclined.

Nathaniel Busch, CPA 

Thanks Jon, that's what I thought.
I'm in a non-real estate partnership out of state (CA) and it's involved.
I'm silent, passive partner, still one day in CA triggers more.

I would assume I would still file with a loss to have the loss carry forward documented.

Thanks Nathaniel, new to this board and didn't realize "Silver Spring, Maryland" is right there under my name.  Great board.

Maryland taxes are fairly straight forward.  At least to me.
Although if you took the Economic Stimulus Depreciation you have to have your Federal Taxes filled out with and without it for the life of the property and carry both to a State From and they didn't clear that up until last year.

If you're in a partnership of some sort you will get K-1's at the end of the year.  You would use these for your taxes.

You're right Jon,
And most years I have losses to carry forward.
And sometimes even with a loss, a line in the K1 triggers a minimum tax in CA.
CA has some different Partnership rules.  It's an island sometimes.

All that said I see many have investment properties in multiple states and I'm looking going outside of Maryland for the first time.  I'm looking down in Charlotte, NC.  My daughter has moved down there and I just retired.
It seems I can get into a decient property with a 1% rental and good schools for about a 1/3 of the cost in my area.

Just trying to figure out how complex I'm making my life.  Just stuff.  Seems very workable.

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