We are moving to Florida from Maryland. We want to rent out our former home in MD to a friend. We will be residents of Florida. What will we have to do as far as Maryland Taxes go? Our house is paid off, what can we write off? Or exactly what do we need to do to make this happen with the least amount of Tax ramifications.
For MD, you will need to file a non-resident return to report the income from your rental.
Even though your house is paid off you will still enter the cost basis of your house and take depreciation. Any repairs or maintenance while the place is rented as well as utilities you continue to pay and any property taxes.
Take a look at Schedule E. These are some of the things you can write off on your rental.
So my follow up question is. Since my residence will be in Florida. Will I ONLY be paying taxes on the rental income? I will not be paying Maryland taxes based on any other money we have coming in, IE social security, retirement pay, interest or dividend's from investments. ONLY money that they will be taxing me on is the Rental Income from the house correct?
That is correct. If all of your other money is earned while a resident (or received when it comes to retirement income) you will only pay taxes on your rental income.
Now, if you move mid year, you will need to pay taxes on the income received while still living there. You will do this by filing a part year MD resident return. But, the retirement, dividends and social security you receive after moving to FL will not be taxed by any state, only federal.