Rental Property in Your Former State After Moving
Nonresident rental income, the nonresident return, suspended losses, and the estate tax exposure
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Rental property kept in your former state after moving to Florida stays taxable there: rent is sourced to where the property sits, so you file a nonresident return each year reporting the net income. Losses are generally limited by the passive activity rules, and states with estate taxes can tax the property even after you've changed domicile.
On this page
Annual filing
| Item | Treatment (varies by state) |
|---|---|
| Rental income | Taxable by the property's state on a nonresident return — net of expenses and depreciation |
| Passive losses | Suspended federally (beyond the US$25,000 active-participation allowance, phased out between US$100,000 and US$150,000 of MAGI) and usually in the state; carried forward and released on sale |
| State tax rate | Graduated nonresident rates — some states compute tax on total income and prorate |
| Florida | No tax on the rental income |
| Federal | Schedule E as before |
Selling it later
The gain (including depreciation recapture) is the state's source income; nonresident seller withholding applies at closing (the selling your former home guide); suspended passive losses are released in the year of a full sale.
Estate tax exposure
States with estate taxes (New York, Massachusetts, Illinois, Minnesota, Oregon, Maryland, Connecticut, and others) tax real estate within their borders owned by nonresidents (the Florida estate tax guide). Holding the property in an LLC may convert it to intangible property for some states' estate tax purposes — but not all: Minnesota, for example, looks through a pass-through entity and taxes a nonresident's share of the Minnesota real estate it holds.
Frequently asked questions
Do I pay my old state tax on rental income after moving?
Yes — rental income from property in that state is its source income.
Do I file a full return there?
A nonresident return reporting the rental income each year.
What happens to my suspended rental losses?
They carry forward and are released when you sell the property.
Can my old state tax my estate because of the rental?
Yes, if it has an estate tax — it can tax real estate located there.
Official sources
The IRS explains: “If you or your spouse actively participated in a passive rental real estate activity, the amount of the passive activity loss that is disallowed is decreased and you therefore can deduct up to $25,000 of loss from the activity from your nonpassive income.” — Internal Revenue Service, Publication 925 (2025), Passive Activity and At-Risk Rules, https://www.irs.gov/publications/p925
The New York State Department of Taxation and Finance explains: “You are a New York State resident if your domicile is New York State OR: you maintain a permanent place of abode in New York State for substantially all of the taxable year; and you spend 184 days or more in New York State during the taxable year.” — New York State Department of Taxation and Finance, Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting for New York State Personal Income Tax, https://www.tax.ny.gov/pit/file/nonresident-faqs.htm
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk handles nonresident rental returns, passive loss tracking, and estate exposure reviews for out-of-state property. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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