Rental Property in NC - Negative Income on Federal Tax - What do report on State Tax

[caoyidebby]

Hello,

I'm a resident in WA and I have a rental property in NC. On the Fedral tax, it shows negative net income (rent income - deduction including property tax, interest, etc.).

What should I do with NC state tax? Should I report $0 or the negative amount under the Nonresident Income Allocation section?

Thanks!

[DianeW777]

Perhaps.  If your federal gross income exceeds the limit for your filing status you are required to file the North Carolina (NC) return. See the chart below and in the link provided.

Nonresident.  If you were not a resident of North Carolina at any time during tax year 2023, but you received income in 2023 from North Carolina sources that was (1) attributable to the ownership of any interest in real or tangible personal property in North Carolina, (2) derived from a business, trade, profession, or occupation carried on in North Carolina, or (3) derived from gambling activities in North Carolina, and your total gross income from all sources both inside and outside of North Carolina exceeds the amount in the Filing Requirements Chart on page 6 for your filing status, you must file a 2023 North Carolina individual income tax return.  

• Instructions and Filing Requirement

[caoyidebby]

Thanks. I think I do need to file NC state tax. The question I have is, should the rental income(loss) be $0 or be the negative value I have in the Federal tax?

[DianeW777]

It depends.  Do not change the $0 if that's what TurboTax carried over from your federal return. 

If nothing was carried over, and if you are able to use the - sign in your entry for North Carolina then put the exact amount of your loss, if not enter zero. 

Each state is different as to whether a loss of one type of income can reduce other types of income. In your case you will have no taxable income to pay tax on.

@caoyidebby