Hi I am looking for an investor friendly CPA in San Diego area who is experienced in rental properties, fix&flips and gap financing, etc. Also looking for an attorney who knows how to best setup LLC's to handle out-of-state rental homes. Any recommendation is welcome! Thank you in advance.
Hi Sean, what kinds of projects are you looking for from your CPA? Tax prep? Bookkeeping? Advice? General knowledge? What state are you looking to make an LLC in?
@Katie Lepore just sent you a PM. please check your inbox.
Please note that as a California resident who invests in out of state rentals - you will be required to file a state return in California and the states that you invest in(unless the state does not have an income tax).
You will pay a tax to the states that you have a rental property in and get a credit for the taxes you paid on your California tax return.
The good thing about having out of state rentals is that you can plan your travels to the states that you have a property in and make a large portion of the travel deductible. You would need to speak with a tax adviser on how to do so and what portion of the travel would be deductible.
Another thing to worry about for California and having out of state LLC's is that California says that out of state LLC's with general partners/managing members making decisions in the state of California are doing business in California.
This may or may not subject you to the filing of form CA 568 and paying the $800 fee.
@Basit Siddiqi Thank you for your advice. By filing a state return in each state that I invest in, do you mean filing a full state return including W2, 1099 income, etc or just the rental portion?
@Sean Yang , you may have to report your W-2 and 1099 income to the states you invest in (because many states use your federal income as a starting point), but you will likely end up paying tax on only the income you earned in that state...roughly.
You will be filing a non-resident tax return in the states that you do not live in and have out-of-state rentals. Every state tax return is different but ultimately you will only be taxed on your rental income.
You may or may not pay tax on the rental business depending on if you are in an income or loss position.
You will file a California resident tax return because you are a resident in the state.
You will report your "world-wide" income on your california return which includes all the income you earned such as from your W-2, 1099 and even includes the income from your out-of-state rentals.
To avoid double taxation - California will provide you a credit for taxes that you pay to other states.
@Basit Siddiqi Thank you for the clarification