Tax Implications of Owning a Rental Property Out of State

[Arjen Mercado]

Hello everyone!

My wife and I are very new to real estate investing. We are both full time software engineers and are very motivated to start our real estate investing journey -- rental properties in particular. We live in Reno where home prices have gone up drastically in recent years and so we are looking to start purchasing small multi-family homes in surrounding states such as the Fresno/Merced, California or Phoenix, Arizona. With that, we are wondering what the tax implications of doing this would be. For example, if we bought a duplex in California -- would we have to pay California taxes on only the rental income from the duplex or are our income from our full time jobs also subject to California income tax?