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Brenda Guy
Brenda Guy, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 151
Experience:  20 years of working with income and estate tax issues for families and businesses.
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If I own rental property in California, will I be required

Resolved Question:

If I own rental property in California, will I be required to pay state income tax in texas for the rental income (I am a resident of Texas)
Submitted: 6 years ago.
Category: Tax
Expert:  Brenda Guy replied 6 years ago.

If you own rental property in California you will be required to file non-resident income tax returns and pay taxes on the net income in California.

If you are required to file in Texas (I thought Texas did not have personal income tax) then you would be allowed to take a credit for any taxes paid to California on the rental income.

Customer: replied 6 years ago.
you are right Texas doesnot have personal income tax (didn't know if rental was considered personal or business income). Do you know if in Texas if the rental property was owned by LLC registered in Texas( if I were to create this LLC). Will I then be paying Taxes on the rental income under LLC. Does it matter if the property under the LLC is in California or Texas with respect to paying taxes. Thx.
Expert:  Brenda Guy replied 6 years ago.

If you put the rental property in an LLC then you will be subject to the state tax rules for the LLC.

In California an LLC with only 1 member is ignored for income tax. So the tax consequences are the same as if you owned it not in the LLC.

Customer: replied 6 years ago.

I live in Texas (resident). Would like to know more specifically if the LLC is registered in Texas and the property owned by LLC is in texas, will the LLC have to pay income tax on rental income (since texas doesn't have personal income tax, I am trying to figure out if I should buy rental properties as personal or under LLC). Thx.

Expert:  Brenda Guy replied 6 years ago.
No, the LLC will not have to file in Texas. LLCs do not pay tax.
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