Need to file Oregon non-resident tax return if sold home recently converted from primary home to investment property?

[edmondsdave]

We were Oregon residents until June 2020, when we moved to Washington. We purchased our primary home in Portland in July 2014, converted it to a rental in July 2020 when we moved, and ended up selling it in April 2021.

The renters moved out in February and their January rent was collected in December 2020 and counted as 2020 income, so our 2021 rental income was below the $4,700 income threshold for married couples filing jointly to file a non-resident return. The profits on the home sale were exempt from capital gains as it was our primary home for more than two of the five years before we sold it.

Do we need to file an Oregon non-resident tax return due to the home sale, or are we exempt due to our Oregon income falling below the income threshold?

[DaveF1006]

According to oregon pub 17, for non-residents with rental property in Oregon, you don't have to file an Oregon return if:

1. Your only Oregon-source income is from rental property, and
2. You have a loss from the rental activity for the year.
3. However, you must file Oregon returns for all applicable loss years if:

• You later sell the rental property in a fully-taxable transaction;
• The sale results in gain that would otherwise be taxed by Oregon;
• You have suspended passive activity losses from the rental activity;
•  You are deducting your suspended losses from that gain on your federal return

I would still file the return, just to be safe even if the income level does not reach the $4700 threshold.

[ Edited 02/04/22|02:48 PST]

[edmondsdave]

Thanks for the quick reply and the link to Or-17. I had gotten the $4,700 value from the table (Table 2) just above that section, which was on the "Do I Need to File?" website. I had not seen the full list or rules that you sent, which seems to supersede that. I think we will have a net loss for the year as we had to make some improvements due to pet damages that weren't fully covered by the security deposit, and the sale wasn't a fully taxable transaction due to the capital gains exclusion, so it seems we may be exempt. 

[DaveF1006]

Yes. I sent a revision in my last post. It does appear if you have a net loss from rental activity, then you don not have to file. If you have net income, I would file just to be safe.