MA income tax on rental income?

3 Replies

I now own a rental property in MA and reside out of state. My question for anyone who might be familiar with this situation is if I will owe MA personal income tax (or any other state tax) on this income?

According to a website I found:

The Massachusetts personal income tax applies to the income of individuals who are employed and/or living in the state, and it is generally withheld by employers from their employees’ paychecks. This tax also applies to the income of estates, trusts, and corporate trusts (including partnerships and associations with transferrable shares).

Since I don't live in the state, nor am I employed there, it would seem I will not owe income tax to MA. My real estate is not in a trust, either. Am I missing something?

Hi @Moshe H. I am an investor who resides in MA and owns property here. My understanding is that even as an out of state resident you will owe state income tax on any income derived from MA sources over a certain threshold (depending on deductions). They don't call us Taxachusetts for nothing! 

I would direct you to the website which states the following: 

"Nonresidents are required to file income tax returns with Massachusetts if their Massachusetts gross income (derived from sources within Massachusetts) exceeds either $8,000 or the prorated personal exemption to which they are entitled, whichever is less. Nonresidents file Massachusetts Form 1 NR/PY- Nonresident/Part-Year Resident Individual Income Tax Return."

And here:

"Massachusetts Source Income That Is Included

General Rule - Massachusetts gross Income includes items of income derived from sources within Massachusetts.

Specifically, this includes income:

  • derived from or effectively connected with any trade or business, including any employment carried on by the taxpayer in Massachusetts, regardless of the year in which that income is actually received by the taxpayer and regardless of the taxpayer's residence or domicile in the year it is received;
  • from ownership of any interest in real or tangible personal property located in Massachusetts;"

I am not an accountant but I would recommend you take this question to a professional tax preparer to be certain you are in compliance with MA tax law. On a personal note, I highly recommend using a CPA to prepare your taxes. I spent a few years doing my own taxes as a landlord and eventually switched to a local CPA. Every year they have saved me thousands of dollars more in taxes than their services have cost. My current CPA charges around $800 for annual returns and the reduced headache alone is worth the money.

Best of luck to you, claim every cent in MA expenses you can!