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gwknopp
New Member

Inclusion of rental income for part time AZ resident

I have a rental home in Arizona and had it for the full 2016 tax year.  I relocated to Arizona in July 2016.  Does AZ require me to include all of my income, expenses and depreciation in my AZ return or prorate based on my residency date?  My prior state was South Carolina and all my out of state rental income was taxed.

3 Replies
TomD8
Level 15

Inclusion of rental income for part time AZ resident

Assuming you moved to AZ during the tax year, you'll be completing a part-year resident AZ tax return (AZ Form 140PY).  On that form, AZ wants you to include all AZ-source business income (such as rental income) you earned both before and after you became an AZ resident.  So no, you do not pro-rate for AZ.  (See Business Income on page 8 of this reference:  https://www.azdor.gov/Portals/0/ADOR-forms/TY2016/10100/140PYBooklet.pdf)

You'll also have to do a part-year resident SC return, on which you must include the portion of your AZ rental income that you earned while an SC resident.  But you'll be able to take a credit on your SC return for the tax you paid to AZ on that portion of the income, so you won't be double-taxed.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
gwknopp
New Member

Inclusion of rental income for part time AZ resident

This would then be net income - revenue less expenses and deprecation?  Its confusing when the speak of Income.
TomD8
Level 15

Inclusion of rental income for part time AZ resident

It's your net rental income that's taxable.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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