Scenario: Where do I pay taxes?

[Diego Torres]

I just bought a 4 unit commercial property (small strip mall) cash out of state, I understand that I will be paying property tax in the state in which the property is located. Now I'm going to rent out the units, where does the rent income pay taxes, the state in which the property is located or the state in which my "management llc" is located? Or both?

[Scott Davidson]

Potentially both. Google "whatever state its located in filing requirements." Each state has different rules but usually if income sourced in that state is under a certain threshold you wouldn't be required to file in that state. Same goes for the management company. The income is traced to its source.