Yes, if you are half owner of rental property, you need to report 50% of rental income and deductions on your tax return.
You're a CA resident and you have rental properties in AZ. You do need to file an AZ Non-resident tax return. If you pay any taxes to AZ due to your net income from the rental properties, you will get a credit on your CA return for paying taxes to Other State. Your resident state taxes you on all your world-wide income.
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