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Trust Deed Investing

I am considering doing trust deed investing to diversify my portfolio.  The trust deeds would be on rehab properties in California, and I would receive monthly dividend/interest payments by the trust deed company.  I reside in Ohio.  The company said I would be issued a 1099-DIV at the end of the year.  From my research, interest and dividend income would not be taxable in California, only in my home state...just like bank interest and stock dividends.  Would this be true for this trust deed investment since I would be receiving a 1099-DIV, or is there a special rule that applies to this situation?  I do not want to get involved if I would have to pay California taxes.

1 Best answer

Accepted Solutions
TomD8
Level 15

Trust Deed Investing

California Revenue & Tax Code Section 17955 covers your situation.  Here is the text of that law:

https://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-sect-17955.html

 

Note that dividends are NOT taxable to a non-resident of CA if "the taxpayer's only contact with this state is through a broker, dealer, or investment adviser located in this state."

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

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1 Reply
TomD8
Level 15

Trust Deed Investing

California Revenue & Tax Code Section 17955 covers your situation.  Here is the text of that law:

https://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-sect-17955.html

 

Note that dividends are NOT taxable to a non-resident of CA if "the taxpayer's only contact with this state is through a broker, dealer, or investment adviser located in this state."

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