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March 20, 2020
Question

I'm an Active Duty Service Member, Home of Record in Florida, Reside in California, and own a rental property in North Carolina. What State taxes, if any, do I file?

  • March 20, 2020
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Carl11_2
Employee
March 20, 2020

As you know, FL doesn't tax personal income. So if your military pay and rental income from NC is the only source of income for you, you don't need to file a CA state at all.

But you will need to file a NC non-resident return for the rental income. Since rental property almost always operates at a loss, you probably won't pay any NC taxes on that rental income. But you are still required to report it every year in order to "prove" to the state you have no taxable income.

Whenever you sell that property, you *will* pay NC taxes on any gains you may realize from the sale, to include paying taxes on the recaptured depreciation.