Out of state property tax deductibles

[Jgat12]

I live in CA and just purchased a rental property in IN. Will i be able to deduct the interest and taxes of the IN rental on my own w2 income from CA?

[leeloo]

You will file a CA resident return and include the income from your IN rental. You will also be able to deduct the expenses, so your profit is what is reported. You will probably need to file a nonresident return for IN.

[NCperson]

@Jgat12 - if you have income in IN, you;ll need to complete an IN tax return.  assuming you are using TT for 2022, you'll need both the CA and IN state tax forms.  TT will figure out what goes on the IN form and what goes on the CA form as well as ensuring that your are not taxed for the same dollar in both states. 

[SundayInSalem]

@Jgat12 Rental income is reported separately from W-2 income, but your total income (rental and W-2) will be included on your California return because CA starts with federal adjusted gross income.

You can claim rental expenses as deductions against your rental income including mortgage interest, hazard insurance, property taxes and depreciation).

If your expenses are more than income, you may be able to subtract your rental loss against your total income. Otherwise, your loss will be suspended and can be used in future years.

As awesome tax gurus @leeloo and @NCperson said, you will have to include your rental income (or loss) on your California and Indiana returns because you live in CA but own property in IN. It’s taxed by both states but you will be able to claim a credit on your CA return for any tax paid to IN as @NCperson says.

Prepare your IN return first so the credit info will transfer to CA.

TurboTax recommends using Premier for rental property. You can start with any version. TurboTax will ask you to upgrade if necessary.

For helpful info see Real Estate Tax and Rental Property.

[Jgat12]

Thank you for everyone’s answer! I appreciate it