Do I have to pay CA Taxes if I purchase a Rental property?

Hey Helen! Yes. Even if you're domiciled in New York, California generally taxes rental income from property located in California, regardless of your state of residence. You may need to file a California nonresident tax return (Form 540NR) and report your net rental income. Property taxes also apply, and renting to family below fair market value may limit your deductible expenses. Consult a tax professional to confirm your filing obligations and deductions. If you're considering a California rental property, call or text me to discuss the investment and what to consider before purchasing. Diya Sarin | DRE 02095684 📞 818.799.7230 📧 [email protected] 🌐 diyasellsla.com IG: diyasellsla

Yes, most likely. Owning a rental property in California generally means that rental income generated from that property is considered California-source income, even if you live in another state. Here's how it typically works: California income tax: If your California rental property generates taxable income, you'll generally need to file a California nonresident income tax return and report that California-source rental income. Federal income tax: You'll also report the rental income and expenses on your federal tax return. New York taxes: As a New York resident, you may also need to report your worldwide income on your New York tax return. In many cases, New York provides a credit for taxes paid to another state, but you should consult a tax professional to determine how that applies to your situation. Keep in mind that you may be able to deduct eligible rental expenses, such as: Mortgage interest Property taxes Insurance Repairs and maintenance Property management fees Depreciation Certain utilities and operating expenses If you're renting the property to family members, there are additional tax rules to consider. For example, if you charge below-market rent or allow family members to use the property as a personal residence, the IRS may treat the property differently, which could limit certain rental deductions. From a real estate perspective, buying an investment property in California is common for out-of-state buyers, but it's important to understand both the ownership costs and the tax implications before purchasing. Because your question involves both California and New York tax laws, I recommend speaking with a CPA or tax advisor who is familiar with multi-state taxation. They can help you comply with both states' filing requirements and ensure you're claiming all available deductions.

Hi Helen, Yes, and it is worth seeing the three separate layers so nothing surprises you: 1. Property tax. Owed to Riverside County no matter where you live. 2. California income tax on the rental profit. California taxes nonresidents on California-source income, and rent from an Indio property is California-source. You would file a nonresident return (Form 540NR) reporting that income. 3. New York taxes it too, since you are domiciled there, but New York generally gives you a credit for tax paid to California, so you are not doubly taxed on the same dollars. You just file in both states. Two practical wrinkles the other answers did not mention: - Nonresident withholding. If a California property manager collects the rent for you, they are generally required to withhold 7% of payments once they exceed $1,500 in a year and send it to the Franchise Tax Board. You can apply for a waiver or reduced withholding, and anything withheld is credited on your 540NR. Worth setting up correctly from day one. - Renting to family. If you rent to relatives below market rate, the IRS and FTB can treat the property as personal use, which limits the deductions that usually make rentals attractive. Charge documented market rent if you want it treated as a true rental. I am a real estate professional, not a CPA or attorney, and cross-state investor situations are exactly where a good CPA earns their fee, so please confirm the details with one. I am based in Los Angeles' South Bay, serving the Palos Verdes Peninsula and greater LA, and I work with out-of-state investors regularly. If you would like an introduction to a strong Coachella Valley agent or an investor-savvy CPA from my network, happy to connect you. Zoltan

Yes. If you’re domiciled in New York but own a rental property in California, California can tax the rental income from that property because it’s California-source income. The FTB says nonresidents are taxed on rental income from California real property. Renting to family doesn’t automatically avoid that. If they’re paying rent, you should treat it like rental income and report it properly. Also, if you ever sell the California property, California may tax the gain from that sale too. I’d have a CPA set it up correctly from the start, especially since you’ll likely deal with both New York and California tax filings.

Yes you are responsible for taxes in the state of operation. Keith Jean-Pierre Managing Principal The Dapper Agents Operations In: NY, NJ, FL & CA

Yes, you have to pay California state income tax on rental income from a property in CA, even if you live in New York. You’ll need to file a nonresident CA tax return each year you earn income from it.

Yes, you must pay property taxes to the jurisdiction(s) in which you own property regardless of where you live.