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Ok, thanks. Basically, state A property tax and state B property tax can go into federal tax return; only state A property tax goes to state A tax return, as usual; no need to file state B tax return.
That's my read on it! I'd be careful and read the instructions about claiming deductions for property taxes paid on both state and federal. If the multiple state thing isn't clear, run this by a professional just in case.
For example, if I buy a small apartment for my parents (in different state), free, no rent. I am the house owner, they just live there for free (paying their own utilities).
Question: How does the second house property tax work? Do I need to file tax return for both states? I don't have any income in my parents' state, only owning the apartment.
Thanks.
You can’t pay income as you don’t have income in that state. The property taxes are paid but you can’t deduct them as it’s not a rental.
Why not call the place you father is living in with no rent a second home. Then you can claim its property tax on your federal return I believe. Also you may be able to claim your father as a dependent since you are providing him a place to live. Depends on his income I think relative to the theoretical value of the lease? May not be able to claim him if you charge him no rent.
Yes you pay property taxes on both properties as the owner. As for if you pay any income tax in the state the home your father is using may depend by state. If you are not a pretty savvy tax person this situation maybe well belong turbo tax step by step process lol
I have properties in two states. I only file tax returns for my main residence state and Federal. Since the standard deduction went up, I didn't have to itemize last year so whether or not to include a state's property tax was a moot point. In prior years, when I did itemize, The property tax for both states was deducted on Federal, and since the Federal Taxable Income gets carried over to the state form, it already has both states property tax taken out.
I am NOT a tax professional though, but I have had CPAs doing my taxes for many years.
Why would you file a state income tax return in a state that's not your residence, nor do you earn any money there?
I also would confirm whether property tax can be deducted from your taxable income on your federal return if it's not your primary residence. I think it can't, and to do so you would have to set up the second house as a rental property and rent it to your parents; then you could offset property tax as a cost of doing business against the rental income. If you did that, you would also be able to depreciate the purchase price of the second house (structure only, not the land) against the rental income. If memory serves, you won't be able to have negative income from a rental house but you could show zero income. For just one rent house the federal provisions are relatively easy to comply with; at some point (multiple rental properties) you have to actually set up a business structure, but not for just one.
Again, the actual accurate answers to your questions will be found in a one-on-one consultation with a professional tax preparer or CPA, not opinions from some people on the internet. I urge you to do so.
Currently I work in State A and have a SFH in state A, and file tax return in state A. Now I am planning to buy a small apartment or condo in state B, then I will also have property tax in state B.
So I am not able to report state B property tax from 1040?
The county tax assessor for the property in state B will likely send your property tax bill to you at the apartment address. I think assessor always send the bill to the taxed property address. You have to check on that.
That property tax in state B will be federally deductible to you because you are paying it and own the property. That is no different than if you owned a vacation home in another state. It will be subject to the $10K limitation on deducting state and local taxes.
You have no income tax filing in state B because you have no income in state B and are not a resident of state B. If state B is NY or CA, just be aware that they may attempt to collect state income tax and you may have to somehow prove that you are not a resident.
If state A, your residence state, allows a deduction for property tax paid, you need to review the related rule for state A. They likely only allow a deduction for taxes on property in the state.
Currently I work in State A and have a SFH in state A, and file tax return in state A. Now I am planning to buy a small apartment or condo in state B, then I will also have property tax in state B.
So I am not able to report state B property tax from 1040?
Yes you can, but there are many changes made in 2019 that limit the total amount to $10K . See here https://www.investopedia.com/article...ome-owners.asp. The personal exemption has risen so much that for many it is not worth itemizing unless you have high medical costs which most won't have. Where you file your income tax is where you live most of the time and where you work. Many retirees that still have income though unearned like to claim a state where they own a home that has no state income tax even if they still have a home in another state.
It's not your resident state. You won't owe any income taxes there. You will owe property taxes though. Property taxes don't require a filing like income taxes.
I think he might be talking about the tax deduction?
Am I correct that if the OP wants to claim a deduction for the property taxes he pays on BOTH homes, he'll need to file state income tax returns for both of them?
No, you are not. You are confusing state and federal tax. He won't get a state deduction because he has no income in that second state. It is unlikely he will get any federal deduction for property taxes unless they exceed $10k but even that will include his state tax deduction for the state he lives in. Best to contact a local CPA to clarify.
The county tax assessor for the property in state B will likely send your property tax bill to you at the apartment address. I think assessor always send the bill to the taxed property address. You have to check on that.
I have never encountered that. Tax bills are sent to the owner's home address--or to the address the owner wishes it to be sent to. It wouldn't make sense to send a tax bill to an address where it wouldn't be received by the taxpayer.
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