Understanding Property Taxation for Out-of-State Properties

Real estate investments can diversify a portfolio, but the best opportunities may not be in a local market. Washington State residents may be enticed to invest in out-of-state properties, but those investments have tax consequences.

Investments in out-of-state rental properties, whether direct or through a partnership, generate income sourced to the state where the property is located. These properties generate ordinary income or losses from rental activities and gains or losses when they are sold. The sale of an out-of-state vacation home could trigger capital gains, although losses will not be deductible. The income from these properties will require filing non-resident tax returns in the states where the properties are located.

Taxpayers who file state tax returns to report income.... read the complete blog on our website.

This article first appeared on Fulcrum Wealth Advisors blog at Out-of-State Property Taxation