Based on the information here you will need to file a non-resident CA return with each payment made as income you've received.  So for the the next 4 years you will file a Federal return, a MS resident return and a CA non-resident return.

Hi –

Based on your description, it sounds like you may have an Installment Sale.

Here are a few links that will give you more information.

https://www.irs.gov/taxtopics/tc705

https://www.irs.gov/publications/p537

https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-1040/installment-sale

If this is an Installment Sale, the tax amount is spread out over the three years vs paying all the taxes in the year of sale.

You will also have to report this sale to California. Here is more information about California.

https://www.ftb.ca.gov/pay/withholding/real-estate-installment-sales.html

I suggest you reach out to a local tax professional, before the end of the year, to assist you with tax planning for the next few years.

Can i file my taxes annuallly for what i receive that year, or do i have to do it quarterly since i dont work and am retired. 

Tax returns are only filed annually ... quarterly estimates are only needed if you will not have enough withholdings to cover your tax bill  and you will owe $1000 or more. 

Also you will need to report the interest earned each tax year so make sure you have an amortization schedule made up for both parties.  

AND you may want to check and  see if reporting the sale in full in the year of sale is better than the installment method for tax reporting ... it is an option even if you will get payments over more than one tax year.  Going forward you would only report the interest earned and not the principal paid.