Solved: I live in CA and in 2016, I sold a rental home that I owned in HI. Do I need to include this sale as part of my CA state return even though the house was located in HI?
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brucevalencia1
New Member

I live in CA and in 2016, I sold a rental home that I owned in HI. Do I need to include this sale as part of my CA state return even though the house was located in HI?

The property is not located in my state of residence (CA) but it seems that my Turbo Tax State (CA) software is treating it like it is. I am planning on filing a HI non-resident tax return to account for the sale of the property but am confused as to why TT is including the sale in my CA resident return.

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Accepted Solutions
TerryA
Level 7

I live in CA and in 2016, I sold a rental home that I owned in HI. Do I need to include this sale as part of my CA state return even though the house was located in HI?

Pay no attention to Tiara808.

Your resident state gets to tax all of your income regardless of where it comes from, so yes, your resident Calif return will have that gain plus any rental income/loss before the sale.

HI also gets to tax the gain & rental income/loss because the property is located there. Prepare the nonresident TT/HI return first, then the TT/Calif so that TT/Calif can get the info it needs from the completed TT/HI return to prepare the other state tax credit on Schedule S for some or all of the HI tax on the income that both states are taxing. This helps to mitigate double taxation.

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2 Replies
TerryA
Level 7

I live in CA and in 2016, I sold a rental home that I owned in HI. Do I need to include this sale as part of my CA state return even though the house was located in HI?

Pay no attention to Tiara808.

Your resident state gets to tax all of your income regardless of where it comes from, so yes, your resident Calif return will have that gain plus any rental income/loss before the sale.

HI also gets to tax the gain & rental income/loss because the property is located there. Prepare the nonresident TT/HI return first, then the TT/Calif so that TT/Calif can get the info it needs from the completed TT/HI return to prepare the other state tax credit on Schedule S for some or all of the HI tax on the income that both states are taxing. This helps to mitigate double taxation.

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Tiara808
New Member

I live in CA and in 2016, I sold a rental home that I owned in HI. Do I need to include this sale as part of my CA state return even though the house was located in HI?

I would try both ways in Turbo Tax and see which way comes out cheaper tax wise for you.  Is it cheaper for you (Federal and with both states individually and separately) how to file?  Check with Hawaii's state tax board if you are required to file after you sell, get their name and of course, don't offer your name.  Just an inquiry 😉

However, there is a place to deduct the taxes in the sales of your Hawaii property in your California taxes under other expenses.  I have rental property in Hawaii too.  But then again, I'm a Hawaii resident.

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