Investing Out of State from CA - What About Taxes and Liability?

[Brant Jones]

I live in CA and so far have only owned rentals in CA. I am looking to invest in small multi-family properties out of state (WI and/or IL), 50/50 with a partner, for better returns, and am curious how others in CA are structuring their legal entities (i.e. LLC in CA or the state in which you invest), and how investing out of state affects your tax situation (i.e. do you pay income tax both in CA and the state in which you invest, just CA, or just the state in which you invest)?

[Jay Hinrichs]

@Brant Jones  in  a state with income tax you will get a credit against your CA income tax there is no double taxation.

were it sucks though is like @Account Closed  paying some of the highest state income tax in the nation then investing in a market that has some of the highest property tax's.. that's the double whammy... property tax's are a big deal with cash flow rentals if you do not expect appreciation or are counting on it..

Like Memphis there is double tax there city prop tax and county.. so better to invest out of the city.. 

Where it makes sense is for those that live in Texas to buy in Texas they don't have income tax so they can mitigate the sky high property tax's and the ever present foundation issues that raise their ugly head through the course of ownership.