Do I need to file the State tax for the state where my rental home is located? I live and work in another state.

[sap1sap]

I owned for the last 3 years a vacation condo at Myrtle Beach, SC but I live and work in VA.  For the last 3 years I have been filing state tax for SC because of the rental income I got from this condo.  But this year, somehow after I completed the Federal tax portion and when I get ready for doing State tax, Turbo tax said 'based on the info that I supplied in the Federal tax, I only need to do VA state tax'  So my question would be:  Do I really need to do state tax for SC ?

[DS30 · Accepted solution]

It depends.

You would only need to file an SC nonresident state income tax return related to your rental home if you had net income from the rental property.

According to the SC Department of Revenue, a nonresident individual only needs to file a SC nonresident state income tax return if the gross income taxable to South Carolina is more than the federal personal exemption amount. So if you have no SC source income, then no SC nonresident filing is required.

But, you should consider this:

Even with a loss you should file nonresident SC returns every year declaring the income, depreciation, expenses, etc. on that property. If you sell the property later you will have a record of any suspended loss carryovers (and/or NOL carryovers) that get freed up to offset the gain on the sale which SC will definitely tax. The only way to claim such deductions against a gain on sale is to file SC returns every year beforehand.

[maesey]

I also need to know about doing a MN tax return where I have a Loss on the rental income on the Fed return, what do I allocate for MN income on the MN tax return.  I had a loss on the federal, do I record the Gross income for rental in MN or the net loss on the MN return?

[DS30]

You will be allocate all rental income and eligible expenses to your MN state income tax return. If you have a net rental loss on your federal return, you will also have a net loss on your MN return.

[maesey]

Thank you so much.

[u358]

But is in really beneficial to file a MN return? I filed an MN1 non-resident last year to track my rental gain/losses in MN. But the only mention of gain/loss in the MN return comes from the federal return, which could include other states. My MN taxable income also includes all my other income (though it's not taxed) so it seems there is no tracking of MN specific gains/losses on the rental property. How does filing a MN allow me to use this year's losses to offset future gains any more than just using a federal return?