Question for rental income

[tommyzhao]

Hello,

We owned only one house in State A. But we moved to State B in the middle of the year due to a job change. We haven't bought a new house in State B and are renting. But we rented out the house in State A.

Questions:

1. Is our former primary residence in State A considered a rental property since we now reside in State B and have rented it out?
2. Are we required to report the rental income generated from our property in State A?
3. Can we claim rental expenses incurred in State B as tax deductions? And how can we navigate this process using TurboTax?

Thank you for your assistance.

[AnnetteB6]

Yes, your rental income from your house in state A must be reported on your Federal return.  In general, it will be reported on Schedule E Rental Income and Expenses unless you are not renting it at a fair market rental price.  If that is the case, your rental income is still reported, but your rental expenses for that property will be limited.

Because you moved during the year, you will be filing two part-year resident state returns for state A and state B.  When you allocate your income to each state return based on when it was earned, the rental income (or loss) will be allocated to state A because that is where the property is located.  

As for claiming rental expenses incurred in state B, there is not a Federal tax deduction applicable for this if you are referring to your having to rent a place to live due to a job change.  

[tommyzhao]

Thanks for your prompt response!