Rental Income

Forum|Forum|3 years ago
March 19, 2023
1 reply
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I am preparing taxes for my parents. I believe they are considered "Active Participants" because they own 100% of the property and they make the decisions about renters and repairs, even though they have a property management company collect the rent, etc. They don't have a loss, but I want to make sure I am completing the return correctly.

Also. this property is in California and they now live in North Carolina. They are retired and their income is the rental, social security, their pensions, and interest on investments. I just read something about having to file a California return, but I think this only relates if they have a W-2 from there (which they don't) or losses.

Thank you for any clarification!

TurboTax Home & Biz Windows

MAK70

Yes, if your parents own 100% of the rental property they are considered active participants.

Because the rental property is in California, they most likely have to file a nonresident California tax return (California does tax all income from state sources, not just the W2).