Managed Property Georgia Rental Income Tax Question

2 Replies

Hello Bigger Pockets Family,

I have been away for a while for personal reasons.  My wife and I need some help, hopefully from someone not a Georgia resident but owns rental property in the state of Georgia.

We are looking at a cabin investment in the north GA mountains, as FL residents I am curious if anyone has some insight they could provide.  The property that we are looking at is onsite managed and fees deducted from rent, owner paid the balance.  So far the numbers just on income are looking to be about 8-10% per year. Since this is ran as a lodge and occupancy/hotel tax is collected above the nightly rate I am curious if I would be obligated to pay the state of GA income tax on the proceeds paid to me annually. Being from FL we are not used to income tax.  And of course having to pay income tax drops my overall yield down a bit.

Also, would a cabin property such as this able to be written off as depreciating asset?

Thanks, 

Mike

@Mike Scott-Smith

The cabin property should qualify for depreciation.

Based are from the Georgia instructions. It looks like you will have a filing requirement with Georgia. It doesn't however mean that you will have to pay a tax. You only report to Georgia what your income is from the property.

Nonresidents

1. Nonresidents who work in Georgia or receive income

from Georgia sources and are required to file a Federal

return are required to file a Georgia income tax return.

2. Legal residents of other states are not required to

file a Georgia tax return if their only activity for financial

gain or profit in Georgia consists of performing services

for an employer as an employee where the wages for

such services does not exceed the lesser of five percent

of the income received from performing services in all

places during the taxable year or $5,000.

3. A nonresident, who receives deferred compensation

or income from the exercise of stock options that were

earned in Georgia in a prior year is required to pay tax on

the income, but only if the prior year’s income exceeds

the lesser of: 1) 5 percent of the income received by

the person in all places during the current taxable

year; or 2) $5,000. However, the income is not taxed

if federal law prohibits the state from taxing it. Federal

law prohibits state taxation of some types of retirement

income including pensions as well as income received

from nonqualified deferred compensation plans if the

income is paid out over the life expectancy of the person

or at least 10 years. See Regulation 560-7-4-.05 for

more information.

I hate to give this answer, but as usual, and like most things. It depends, especially on how your business is structured, lets say you have a holding company. If you do, the holding company may be required to withhold on investors behalf. At which point the investor would be able to use that withholding as a credit against any GA tax liability on their personal return. 

Generally, the withholding rates in GA are 4% unless you are an exempt organization. I would strongly suggest consulting with your tax advisory. 

Good luck, I hope it all works out how you want!