California Real Estate Tax Question

[markseven]

Hi all,

I have Googled, to no avail. From my experience, this board has well-qualified experts from just about every field, so I thought I would send up a flag:

• I live in Dallas and am renting out our house in Orange County.
• I have been paying some sort of real estate tax to the California Franchise Tax Board (FTB) on a monthly basis.
• The first year that we had tenants my property management company filed for a waiver of the tax, but it was declined. The FTB didn't provide an explanation of why it was declined.
• The PM company then indicated that inspite of the no waiver, I would get all of the money back after filing my taxes. I got back less than half of what I paid.
• The second year of leasing the PM company again filed for a waiver, again it was declined. Again the FTB didn't say why, and this time I got zero refund on these taxes.

Can anyone shed light on this tax and / or how I go about recouping some of it as a tax refund?

Second question:
If I sell the house, what is sales tax rate / percentage?

Again, searched, no firm answers...

Thanks in advance!

[mrsleeve]

you own a rental property in CA, you must be rich, so there for you should have to pay more in property taxes....... Sound about right????

I cant help I dont know anything about CA tax laws other than they are insanely high and numerous.

[markseven]

you own a rental property in CA, you must be rich, so there for you should have to pay more in property taxes....... Sound about right????

I cant help I dont know anything about CA tax laws other than they are insanely high and numerous.

We are taxed twice on this house; regular property tax and this second tax on the rental income. Sacramento is definitely getting their fair share.

Sleeve, remind me, are you in North Dakota?

[mrsleeve]

Montana.... We have reached capacity just in case you are wondering :devil:

[markseven]

Montana.... We have reached capacity just in case you are wondering :devil:

I don't blame you. I think people in Texas are tired of all the new transplants.

I was asking because my sister and family are moving from Costa Rica to North Dakota (brother in law got a new job there).

Being a Montanian, do you like the Longmire series?

[kickinindian]

I was asking because my sister and family are moving from Costa Rica to North Dakota (brother in law got a new job there).

thats a fucking shock to the system as far as everyday living.

[MR E30 325is]

I'd try a CA subforum on Biggerpockets.com for this question.

You'll get a much more reliable and quicker answer over there.

Good Luck.

[markseven]

thats a shock to the system as far as everyday living.

For sure. Sis is not happy about it, but the BiL is getting his dream job (not geographically obviously). But, everything in life appears to have a trade-off.

I'd try a CA subforum on Biggerpockets.com for this question.

You'll get a much more reliable and quicker answer over there.

Good Luck.

Hey thanks man, that is a great idea.

[Jon325i]

Hi all,

I have Googled, to no avail. From my experience, this board has well-qualified experts from just about every field, so I thought I would send up a flag:

• I live in Dallas and am renting out our house in Orange County.
• I have been paying some sort of real estate tax to the California Franchise Tax Board (FTB) on a monthly basis.
• The first year that we had tenants my property management company filed for a waiver of the tax, but it was declined. The FTB didn't provide an explanation of why it was declined.
• The PM company then indicated that inspite of the no waiver, I would get all of the money back after filing my taxes. I got back less than half of what I paid.
• The second year of leasing the PM company again filed for a waiver, again it was declined. Again the FTB didn't say why, and this time I got zero refund on these taxes.

Can anyone shed light on this tax and / or how I go about recouping some of it as a tax refund?

Second question:
If I sell the house, what is sales tax rate / percentage?

Again, searched, no firm answers...

Thanks in advance!

Re: this monthly bill thing to the FTB, I would consult a tax professional. Not sure I would take the Property Managements' word on what they are telling you.

As for selling the property and your tax liability, that too should be directed to a tax professional. I found this via my friend Google....

https://ttlc.intuit.com/questions/2915306-selling-a-rental-home-in-california-how-are-capital-gains-taxed-federal-or-state-both

I have sold a house before in Calif, but it was my primary residence, not a rental. Under that circumstance, the tax rate to pay is based on the county where the property is located.

Jon

[markseven]

Re: this monthly bill thing to the FTB, I would consult a tax professional. Not sure I would take the Property Managements' word on what they are telling you.

As for selling the property and your tax liability, that too should be directed to a tax professional. I found this via my friend Google....

https://ttlc.intuit.com/questions/2915306-selling-a-rental-home-in-california-how-are-capital-gains-taxed-federal-or-state-both

I have sold a house before in Calif, but it was my primary residence, not a rental. Under that circumstance, the tax rate to pay is based on the county where the property is located.

Jon

Apparently our friend Google likes you better.

Thanks for the info! I was thinking I need a real estate tax person. Problem is that we are in the thick of the tax season and all are swamped.

[mrsleeve]

wait in CA you have to pay taxes on the proceeds of selling your house ???? DA-FUK

[markseven]

wait in CA you have to pay taxes on the proceeds of selling your house ????

Yes. Not sure of the details and how it is calculated.

[MR E30 325is]

wait in CA you have to pay taxes on the proceeds of selling your house ???? DA-FUK

To my knowledge you need to pay a capital gains tax for an investment property sold in all of the states. The percentage varies depending on how long you have owned the asset (cutoff is a year IIRC).

This fact is why the 1031 exchange is so popular for investors. If you purchase another investment property, within a certain time limit, that is of equal or greater value relative to the property you are selling, you get to defer the capital gains taxes. That's a huge win, as you can theoretically defer the capital gains tax indefinitely.

This doesn't apply to your primary residence, just investment properties.

[Jon325i]

wait in CA you have to pay taxes on the proceeds of selling your house ???? DA-FUK

Not a sales tax per se, just the property tax owed per the county's assessment, and that may be negotiated into the sale price if the seller is in a financial hardship (sadly, that seems too common these days). Another way you may be faced with paying taxes on the sale of real estate is if you sold an investment property and didn't put it towards another investment property within a certain timeframe. The other way you may be subject to taxes at the time you sell real estate is if you made over $250,000 profit (if single) or $500,000 profit (if married).

Jon

[markseven]

Not a sales tax per se, just the property tax owed per the county's assessment, and that may be negotiated into the sale price if the seller is in a financial hardship (sadly, that seems too common these days). Another way you may be faced with paying taxes on the sale of real estate is if you sold an investment property and didn't put it towards another investment property within a certain timeframe. The other way you may be subject to taxes at the time you sell real estate is if you made over $250,000 profit (if single) or $500,000 profit (if married).

Jon

Jon, et al., from what I have learned, there two scenarios which favor the seller:

1. Owner occupied for more than two years: no capital gains tax / sales tax
   
2. Investment property in which it was the owner's primary residence for at least two of the last five years: no capital gains tax / sales tax

Any scenario outside of these two leaves one exposed to capital gains / sales tax.

Can anyone confirm?