Nonresident to File Tax on Rental Property? (sales, rentals)

[tylerzero]

I'd appreciate it if someone could clarify the following:

Does an individual who does not live or work in Tennessee but owns a house strictly for investment purposes (rental) need to file a Tennessee state tax return?

Thanks in advance.

[JMT]

Originally Posted by tylerzero

I'd appreciate it if someone could clarify the following:

Does an individual who does not live or work in Tennessee but owns a house strictly for investment purposes (rental) need to file a Tennessee state tax return?

Thanks in advance.

Tennessee has no state income tax except for stock dividends, so I'm not sure why you would pay a state tax on rental property. You would pay local property taxes, but that's it. I think.

Have you called the county clerk's office in the county where you own property?

[hiknapster]

That's the kind of question one asks their accountant.

[HARDMCY]

Tennessee state tax department taxes on interest and dividend on the Individual Income Tax Return. If you only have rental income, you don't need to file the TN state income tax.

[ry-hab]

my accountant said YES. I just called the Tennessee Department of Revenue. They said YES.
Penalties and Interest will be due back to the date you PURCHASED the property in their state.
It is under the State FRANCHISE and EXCISE tax.
Franchise tax is based upon the property value
Excise Tax is based upon the income from the rental

WASS!!! (we are so screwed)
Paid MORE tax on a stupid $70,000 rental in TN than I did on our $300,000 rental in CA!

[hiknapster]

Originally Posted by ry-hab

my accountant said YES. I just called the Tennessee Department of Revenue. They said YES.
Penalties and Interest will be due back to the date you PURCHASED the property in their state.
It is under the State FRANCHISE and EXCISE tax.
Franchise tax is based upon the property value
Excise Tax is based upon the income from the rental

WASS!!! (we are so screwed)
Paid MORE tax on a stupid $70,000 rental in TN than I did on our $300,000 rental in CA!

Get another accountant. Is he/she in Tennessee?

Family owned can be an individual.

See below. Also check out entire link it will explain all of it:

How does an entity claim the family-owned exemption?
A non-corporate entity which believes that it qualifies as a family-owned entity with substantially all of its income from passive investments and/or farming so as to be exempt from franchise, excise taxes under Tenn. Code Ann. Section 67-4-2008(a)(11) must initially file an Application for Exemption form with the Department of Revenue's Taxpayer Services Division. The form, with instructions is available on the Department's website at Forms.

The form must be signed by an owner, member or partner of the entity claiming the exemption. In order to maintain the exemption, the entity must file a renewal application annually by the 15th day of the fourth month following the close of the entity's tax year. The completed form should be mailed to:
Tennessee Department of Revenue
Attn: Taxpayer Services Division
500 Deaderick Street
Nashville, TN 37242.

Two criteria must be met in order to qualify for the family-owned non-corporate exemption:
At least 95% of entity's ownership must be held by family members, and
Substantially all (66.67%) of the activity of the entity is either:
The production of passive investment income, or
The combination of the production of passive investment income and farming.
For this purpose, "Passive investment income" is defined as gross receipts derived from royalties, rents, dividends, interest annuities, and sales or exchanges of stock or securities.

Franchise & Excise Taxes Frequently Asked Questions

[HARDMCY]

No filing is required. If anyone who is not a resident of Tennessee has question on whether he/she should file a Tennessee State Income Tax for just having rental income in Tennessee Please contact their State Revenue Department Contact Us at 1-800-342-1003.

[ry-hab]

Originally Posted by tylerzero

I'd appreciate it if someone could clarify the following:

Does an individual who does not live or work in Tennessee but owns a house strictly for investment purposes (rental) need to file a Tennessee state tax return?

Thanks in advance.

DEAR TYLER

YES is the short answer. I was stung with this last year.
I have done a tremendous amount of research and would gladly chat about it in specific detail if you desire.
However, I did find the folks at the Franchise/Excise Tax board to be very helpful - 615-253-0600

Long and short. They require both Franchise AND excise tax on rentals.
Franchise tax is based upon VALUE of the property. THis is your BOOK value - which could be minus any depreciation your accountant is carrying for you. OR it could be actual value minus any indebtedness you have (ie Mortgage)
Excise Tax is the INCOME from your rents - minus any repairs or expenses.
BOTH of these taxes are due annually!

SUCKS

However, there are a FEW exemptions available. This is where talking to someone at the tax board helps. They don't want to share these exemptions readily - you gotta really PRY.

You can research the FONCE exemption - it needs to be applied for EACH YEAR - they CAN DENY it. This has specific parameters - most important detail to me is/was that you can only own LESS than 4 rentals ands still qualify for FONCE.

Hopes this helps.
Reply and I will figure out how to continue the conversation if needed.

[ry-hab]

Originally Posted by HARDMCY

No filing is required. If anyone who is not a resident of Tennessee has question on whether he/she should file a Tennessee State Income Tax for just having rental income in Tennessee Please contact their State Revenue Department Contact Us at 1-800-342-1003.

sorry to contradict HardMcy
tax is required - and any questions should be referred to the TN State Franchise/Excise Tax board directly.
I did a tremendous amount of research on this topic after being stung last year.
Unless you qualify for an exemption / (we DID luckily) you must pay franchise and excise tax annually

Contact information for the TN Tax Board is 615-253-0600
Contact Us

[BirdieBelle]

Originally Posted by ry-hab

DEAR TYLER

YES is the short answer. I was stung with this last year.
I have done a tremendous amount of research and would gladly chat about it in specific detail if you desire.
However, I did find the folks at the Franchise/Excise Tax board to be very helpful - 615-253-0600

Long and short. They require both Franchise AND excise tax on rentals.
Franchise tax is based upon VALUE of the property. THis is your BOOK value - which could be minus any depreciation your accountant is carrying for you. OR it could be actual value minus any indebtedness you have (ie Mortgage)
Excise Tax is the INCOME from your rents - minus any repairs or expenses.
BOTH of these taxes are due annually!

SUCKS

However, there are a FEW exemptions available. This is where talking to someone at the tax board helps. They don't want to share these exemptions readily - you gotta really PRY.

You can research the FONCE exemption - it needs to be applied for EACH YEAR - they CAN DENY it. This has specific parameters - most important detail to me is/was that you can only own LESS than 4 rentals ands still qualify for FONCE.

Hopes this helps.
Reply and I will figure out how to continue the conversation if needed.

Originally Posted by ry-hab

sorry to contradict HardMcy
tax is required - and any questions should be referred to the TN State Franchise/Excise Tax board directly.
I did a tremendous amount of research on this topic after being stung last year.
Unless you qualify for an exemption / (we DID luckily) you must pay franchise and excise tax annually

Contact information for the TN Tax Board is 615-253-0600
Contact Us

Are you taking about COMMERCIAL property????

I know LLCs are subject to the F&E tax, but the FONCE exemptions are pretty clear.