Rental loss in another state

[taxtime]

Alright I am thinking out loud here, and you folks please see if this makes sense. I have a client that has out of state rentals. I know that the state the rentals are in have a state income tax. Clint is showing a net rental loss on three properties on 1040 of 2500. I know if he had income it would be taxed in the state where the rentals are. Since he has a loss, I was not going to file a return in the state where the rentals are located and add that loss back to his income for the state in which he resides. I think that should be right. Thanks for the input.

Larry

[BOB W]

Alright I am thinking out loud here, and you folks please see if this makes sense. I have a client that has out of state rentals. I know that the state the rentals are in have a state income tax. Clint is showing a net rental loss on three properties on 1040 of 2500. I know if he had income it would be taxed in the state where the rentals are. Since he has a loss, I was not going to file a return in the state where the rentals are located and add that loss back to his income for the state in which he resides. I think that should be right. Thanks for the input.

Larry

Huh????? Add it back to res state?

I would keep track of previous losses for the non res state and treat it as a carryover loss. Check the non res state on how they handle NOL carry forwards. You may need to file a return to keep the carry forwards going. When the property is sold you should be able to use the carry forward losses to reduce the gain...???

[Y2KEA]

He still must file that state because of the gross income & also so he gets the NOL C/F for use in future years and/or to reduce gains upon an EDPA of the individual properties.

[myerstaxes]

Yes, File the losses

I file all the states one of my clients has rentals in...There are several, but I need to establish those losses for the future...

[taxtime]

The only

reason I said add back is to put it back into his income for the state in which he lives (agi carried from the federal return has the loss in it). I don't see why that loss should reduce that taxable income (in resident state). Does he still get a reduction of income in the resident state? Did not think about NOL. Thanks for all the replies.

[BOB W]

Definately DO NOT take away the rental loss on res state.

[S T]

Loss Resident State

Yes, definetly he retains the loss in resident state.

Look at it this way. Out of state rental property has a "gain" you would have to report the gain to the non resident state, and also to the resident state. If you paid tax allocated to that gain in the non resident state, then you would more than likely qualify for the out of state tax credit in the resident state.

So even though there are no taxes and losses, and no out of state tax credits, you still want the losses on the non resident state books, so to speak, for when the property is sold.

No adjustment on resident state for the loss, t/p should be able to take them.

Sandy

[BOB W]

In other words>> Federal tax return has its basis, then each state has their basis which can be different for Federal and each state. The same goes for NOLs, if any.

[Y2KEA]

reason I said add back is to put it back into his income for the state in which he lives (agi carried from the federal return has the loss in it). I don't see why that loss should reduce that taxable income (in resident state). Does he still get a reduction of income in the resident state? Did not think about NOL. Thanks for all the replies.

You include all income generally (whether gain/loss) in res state if full year res. If you have res state for TP set up properly for your client, losses from foreign state should show on res state return.

In my state (CA) at least, a full year res, gets to enjoy the taxation of ALL income/losses regardless of source.

[taxtime]

Thanks folks

I guess I was just having a mental block with this. Thanks again.

Larry