"even if I never resided in Hawaii?"

Yes it is the general rule. Real estate is taxed in the
state where it is. It is also taxed to the state of
residence. There are offsets - that is, "credit for tax
paid other states" exists in most states and depends on
whether you are a resident, non-resident, and whether the
other state allows the credit..... Most of us have to sit
down with a pencil and paper at this point....but there is
usually some credit allowed for double taxation.

Nan, EA in Los Angeles

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"bill" <williams12345[at]excite.com> wrote:
- quote -

Real property is taxed where it is located. Your state of
residence taxes your income regardless of source.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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"bill" <williams12345[at]excite.com> wrote:
- quote -

Real property is taxed where it is located. Your state of
residence taxes your income regardless of source.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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"bill" <williams12345[at]excite.com> wrote
- quote -

If you sold your lot in Hawaii, yes, you would have to pay
income tax to Hawaii on the gain even if you did not reside
there. But you would ALSO pay tax to California on the gain
since that is where you do reside. You would, however, get
a credit on your California return based on (but not
necessarily directly equal to) the tax you paid to Hawaii on
the gain. So you do not get "double taxed" on the same
income. Of course, someone who lives in Nevada and sells
California real estate would be taxed by California and
would not have any tax credit since Nevada does not have an
income tax.

Vida Freeman, EA

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bill wrote:

- quote -

Generally, income that is sourced outside of your state of
residence is taxed by *both* your state of residence and the
state the property is located in. Generally, there is a
credit allowed on one or the other return (in most states it
would be the resident state return, but in California it
will vary based on which state is involved). Effectively,
the mechanics of such credits tend to insure that you
effectively pay the *higher* of the two state taxes.

--
Ed Zollars, CPA
Phoenix, Arizona

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A. G. Kalman wrote:
- quote -

It's not higher than they would pay if they WERE a
Calfiornia resident. It's probably higher than the tax a
California resident would pay ONLY on the California income
($350,000).

On the other hand -- the allocation factor on the 540NR --
unlike Arizona's 140PY -- can be greater than 100%, in
which case he would pay less than a California resident
would pay ONLY on the California income.

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bill wrote:
- quote -

Yes.

- quote -

No. It's also taxed in Calfifornia. There would be an
offset for tax paid to the other state on one of the
returns, so you would only end up paying the higher of the
two state tax rates.

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bill wrote:

- quote -

Wrong. The sale of real estate in California is a
California sourced event. They would hit you for $350K x
9.3%.

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Arthur L. Rubin wrote:
- quote -

Gee Arthur, could you explain how the the tax paid to CA by
a nonresident of CA on the sale of their CA principal
residence would be higher than if this they were a CA
resident? The resident pays tax on the additional gain at
their marginal tax rate. The nonresident pays tax using the
average tax rate paid based on an as-if they were a
resident. The average rate would be less than the marginal
rate.

--
Alan
http://taxtopics.net

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- quote -

"Dont count your chickens ..."
Las Vegas had the highest housing price increase in the
nation last year at 52%. They are starting to approach CA
prices. CA has had housing price drops before ...

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naneklund[at]aol.com (Nan Eklund) wrote:

- quote -

Help me to understand this. Is this the general rule: When
selling real estate, the state income tax on the gain is
paid to the state where the property is located, independant
of your current principle residence.

So, if I sold my lot in hawaii, I would have to pay state
income tax to hawaii, even if I never resided in hawaii?
And, none of that cap gain would be taxed in california
(where I reside)?

regards,
bill

Moderator: California taxes everything everywhere.

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bill wrote:

- quote -

Wrong. Sale of California property is taxable in
California, regardless of residency.

Your tax could be more or less than the tax a CA resident
would pay on $350,000, depending on your other income --
probably more.

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williams12345[at]excite.com (bill) wrote:

- quote -

Nope. Wrong. The house is in CA, so the gain is CA source
income, taxable in CA regardless of your residence at the
time of sale.

Sorry.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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"bill" <williams12345[at]excite.com> wrote:

- quote -

Its not your location of your principal residence that
controls in this situation, its the source of the income.
Virtually every state I've ever dealt with has a "source
income filing requirement" meaning if income originates
there it gets taxed there and California has been among the
most aggressive in asserting this doctrine. Based on your
information, you will have Federal and California tax on the
sale of your residence.

I should caveat this with I haven't done a sale of a CA
residence for at least 2 years so by all means check with a
local pro and don't tell CA "Gene said so".

Gene E. Utterback, EA

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"bill" <williams12345[at]excite.com> wrote:

- quote -

Your premise is false. It's California property. Where you
live is irrelevant to its taxation as such. Any gain is
taxable to the extent it is Federally taxable.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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If real estate is in California, California will tax the
sale whether you are in California or not. However
California does accept the Federal rules for the $250,000
exclusion.

Nan, EA in LosAngeles

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As much as I enjoy calif, I am constantly reminded of its
excessive income tax. And, I would likely retire in another
state. I wonder if the timing of the move and sale of
current house would provide another incentive. How would
the following be treated for calif state income tax? I
assume the fed income tax would be the same whether I sold
while living in calif or not.

1990 purchased house in calif for $200K
december 2005 move to nevada (or maybe arizona), and
remain in nevada until at least jan 2007,
in order to legitimately claim nevada as
principle residence for 2006.
january 2006 sell calif house for $800K

I am single, so only $250K deduction for sale:
$800K sell price
-$200K cost basis
-$250K deduction
---------
$350K gain

Fed taxes:
$350K x 15%
Cal taxes:
$0 ?? I think this would be zero, since principle residence is nevada
for year of sale, 2006. Is that right?
Nev taxes:
$0

thanks
bill

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