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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I own a property investment in New Orleans. I live in the UK

Resolved Question:

I own a property investment in New Orleans. I live in the UK and am a UK citizen. I receive income from the investment which is leased long term on a NNN lease. I have been paying US Federal income tax and Louisiana State tax on the rental income. My status is that of a non-resident alien. My question is - should I be paying State income tax and, if so, what are the criteria used to decide whether the State tax is due? I understood that the tax was payable to the State in which one lives. Since I do not live there I thought that I would not have to pay it.
Submitted: 8 years ago.
Category: Tax
Expert:  Merlo replied 8 years ago.
Hello Arnold,

Paying tax to a state where you live is only one criteria for paying state taxes.

Here in the United States, we pay taxes to our resident state and to any state where we have income. So even US citizens or residents of the US pay state tax to a state where they own investment property, even if they do not actually reside in that state.

This same rule would naturally also apply to any nonresident alien who owns investment property. The only time you would not be liable for state tax is if the rental property which you own was located in one of the 9 states which impose no state tax. Unfortunately, Louisiana is not one of those states.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you Arnold.

Merlo and other Tax Specialists are ready to help you
Customer: replied 8 years ago.

Thank you for the comprehensive answer. Regards.



Expert:  Merlo replied 8 years ago.
Hello Arnold,

Did you have any follow up questions on this? If so, please let me know.

Otherwise, please press the Accept link if you were satisifed with my answer.

Thank you again Arnold.