Yes, if you have net income from a rental property in CA, you will have CA sourced income and will need to file a CA nonresident state income tax return to report this income. Usually you get a state tax credit in your home state to offset these nonresident state taxes but since WA has no state income tax filing requirement, no state tax credit will be available.
However, you will not need to file a CA nonresident state
income tax return if you will report a net rental loss for the year in CA
on this CA rental property.
According to the CA Department of Revenue;
You are required to
file a Nonresident or Part-Year Resident Income Tax Return (Long or Short Form
540NR) with California if you have income from California sources, such as rental income, income from the sale of
property, or partnership income in 2016 and you are:
- Single with a total income
from all sources of $16,597 or more
- Married with joint income
from all sources of $33,197 or more
But, you should
consider this:
Even with a loss you
should file nonresident CA returns every year declaring the income,
depreciation, expenses, etc. on that property. If you sell the property later
on you will thank your lucky stars for any suspended loss carryovers (and/or
NOL carryovers, discussed below) that get freed up to offset the gain on the
sale which CA will definitely tax. The
only way to claim such deductions against a gain on sale is to file CA
returns every year beforehand.
