If you own a NNN in "State "A" but live in "B", where do you pay taxes?

Could you incorporate in a no-tax state "C" and transfer the lease to that Corporation to minimize tax? Finally, if you incorporate, would extra payments to lower principal of the commercial loan be a business expense and therefore be made with pre-tax dollars?
In Buying Property - Asked by Dave K. - Sep 27, 2010
Report Abuse
Answer this Question

Answer(s)

Rob B.
Chandler, AZ

Dave....
Please consult with your tax advisor on this to verify my opinion. It is my belief that you would pay the business and property related taxes in State A. You would pay any cash received from the property in State B. With regard to incorporating in one state and doing business in another, you will likely have to register as a "foreign" corporation in the state where you are doing business. Foreign to the state where the business in being conducted. Lastly you will have to pay taxes on any gain from the property that comes from principal reduction, while the interest rates are deductible as a business expense.
My belief is that we would all be a lot better off if all states were more responsible in their spending and the tax rates were not so high.
Rob Baird, CA RE Lic. #544165 (One of the oldest, active licenses in CA)
951 515-5855

Sep 28, 2010
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question