I live in California but I have rental property in Colorado. I pay Colorado tax on the rental income. Do I also have to pay California tax on this property?

[jdoniach]

I have one rental property in California that generated $4,768 in income for 2016.

I have four rental properties in Colorado that generated a total of $10,804 in income for 2016.

The total for the Federal return is $15,590.

TurboTax Premier shows a "Rental or Royalty Adjustment" of $14,574 for the 2016 California state tax return. Is this correct?

[TerryA · Accepted solution]

The rule is: the state you live in gets to tax all of your income regardless of where it comes from, and a state gets to tax income earned or located within it.

So both CA & CO get to tax your CO rental income. The good news is that TT/Calif will prepare a tax credit for some or all of the CO tax on the income that both states are taxing to help prevent double taxation. Prepare the nonresident CO return first, then the resident CA return.

[CL6]

What if I didn't do the state with rental income first, how do I update this? Thanks in advance.

[TerryA]

Ultimately, it doesn't matter which is "first" as long as the resident state has a chance to calculate AFTER the nonresident state is completed.

[CL6]

Thanks, again, TTTerry.

[mallika-bachan]

TTTerry,
I wanted to check - I live in CA, have rental property in MI. When doing the CA tax, after the single-member LLC question, there’s a screen 'Other Expenses - Rental Use Only' It says ‘… Also, if any of the transferred (from the federal return) amounts need to be adjusted for California purposes, make those adjustments below.”
My question is, do I need to make any adjustments?