Where is rental income sourced from?

Rental income is sourced from where the rental property is located. This principle is based on the idea that income derived from rental activities is tied to the physical location of the property, as tax laws typically dictate that income is sourced in the jurisdiction where the property itself resides.

For instance, if a property is located in California, the rental income generated from that property is subject to California state tax laws, regardless of where the owner lives or where the tenants reside. This is important because it influences how and where the income is reported for tax purposes.

Other options might suggest that either the residence of the property owner, the location of payment receipt, or the tenant’s residence determines the source of rental income, but they do not align with tax regulations that apply to the taxation of rental income. The key factor is always the location of the property, as that is where the economic activity takes place.