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529 and real estate funds

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  • 529 and real estate funds

    Hey guys so I had a question about investors of real estate funds that require multi-state filing and 529s.

    If you are a resident of a state without a tax break for 529s (ie: California) but also invest in private real estate funds (that requires multi-state filing) can you open a 529 in one of the states that the real estate fund invests in and offset some of your state taxes as a non-resident investor of that state?

    An example: I live in CA (no tax break) but my Real Estate fund owns properties in Ohio which has state income tax. Typically I would have to pay CA state tax (income from my regular job) and also Ohio state tax (income from my real estate). But as a CA resident can I get a tax break on my Ohio state taxes by investing a 529 for my child in Ohio?

    What do you guys think?

  • #2
    Yes, you can deduct contributions to an OH 529 even if you’re not a resident, as long as you have enough taxable income in OH to absorb the contribution. In addition, you can take a deduction in OH for a rollover from your 529 plan in CA. The deduction is limited to $4k/beneficiary/yr with unlimited carry forwards.

    Note that 529 tax regs are state specific and what works in OH may not work in another state.
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