but want to make sure we don't need to show MD the tax losses on the property.
If you don't file an MD tax return, then you're saying that all of your rental income received from your MD property is profit, and is therefore taxable by the state. The state comptroller will have an absolute field day with you on an audit. If lucky, the only thing you would have to pay the state would be the fines and penalties for not having filed a tax return. Such fines/penalties would probably be assessed for each tax year you didn't file too.
The only way to show the state that you do not have a taxable profit, is to file a state tax return. Period. End of Story. If you don't file a state return, then you are leaving the door open for the state to not only come after you, but to win.
This will really come into play in the tax year you sell the property. You need to show the state that you did "in fact" depreciate the property over the years (that would be on your federal return) and that you recaptured that depreciation. (recaptured depreciation is taxable income at both the federal and state level.)
You need to quit playing games and get all your returns filed before the July 15th deadline.
