Out of State Investing? File a tax return?

Question

I live in PA and have a PA LLC... I am looking at purchasing investment properties in NJ. I was curious if anyone who has done this has had to pay any sort of tax or file a NJ State return? I just want to make sure I account for all of my figures when running the numbers. My accountant usually take a few days to get back to me and I may need to make a quick decision on 1 particular house.

Thanks!

Natalie Kolodij · Answer

Any state you earn income in you're considered in business in that state.

You'll need to file there and there will likely be a credit system between states to avoid double taxation- but adding state returns to your filing will add cost to your annual fee with your CPA.

Some states have no state tax, or no tax on rental income at lower levels, and avoid this:

TX, FL, WA, Ohio in some situations

Ashish Acharya · Answer

Yes, you will file in NJ. Generally, you will get some sort credit for the taxes paid in your resident state so there is no double taxation.

Kevin Sobilo · Answer

@Matt Daley, I won't comment on the tax question although I don't believe you have to pay income tax in the foreign state.

One issue I recommend investigating is the business entity. You might need to register your PA LLC in the other state or the name at least in order for it to be a legal recognized entity to do business in that state. I recommend investigating that.

John Duston · Answer

If you buy with the PA LLC, file as a foreign entity in NJ. Your account can get back to you on NJ filing requirements and if you'll need to file there.

Basit Siddiqi · Answer

@Matt DaleyThere will likely be an additional cost by your accountant to file the additional return in New Jersey. However, I wouldn't get out of a deal just because you have to file an additional tax return.To answer your question - Yes, you will likely have to file a NJ return. Given that it is a rental, it should be your accountant's job to pay $0 or little in tax to NJ. If there is a tax due, PA will give a credit for taxes paid to a different state.Best of luck!

Out of State Investing? File a tax return?

Out of State Investing? File a tax return?

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