Question

How do I allocate rental Income loss on partial year state tax return between 2 states?

Forum|Forum|3 years ago
April 7, 2023
1 reply
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I'm working on a partial year state tax return for Indiana. I moved from Indiana to Tennessee on April 20th. I established residency in Tennessee on that day. I owned a rental house in Indiana that I rented out from Jan thru May 2022. I had a $1,200 rental income loss for the year. How do I allocate this amount between the two states? Would four months of loss be applied to Indiana?

Also, I sold the rental home on Aug 31, 2022 and have a $24,000 capital gain. I was living in Tennessee when I closed on the rental property. What portion of the capital gain is reported to Indiana?

TurboTax Home & Biz Windows

J

JamesG1

The income rightfully belongs to Indiana. Indiana has a claim on the real or personal property located in Indiana. The TaxBook page IN-8 states:

Indiana Income and Proration

Part-year residents owe tax on taxable income received from all sources while a resident. A part-year or full-year nonresident owes tax on income from Indiana sources while a legal resident of another state.

Indiana income includes income from the following sources: