I own a property in California and am planning to move to another state soon. I intend to rent out my California property, and a property management company will handle the rental.
Given that I’ll be living out of state, I’m wondering if I can still claim California residency for tax purposes. Also, I want to know if there’s any way to avoid or reduce the 7% nonresident withholding tax on rental income from California.
Any guidance on this would be greatly appreciated!
"Given that I’ll be living out of state, I’m wondering if I can still claim California residency for tax purposes."
Your residency for tax purposes isn't something you "claim"; it's a matter of state law. If you abandon your domicile (your main, primary home) in California, and establish a new domicile in another state, then for state tax purposes you become a non-resident of California and subject to CA's rules for non-residents. You can have only one domicile state at a time.
This CA tax publication details CA's rules on determining residency:
Thank you so much for your response!
I was wondering if there’s any way to work around the 7% non-resident withholding tax? Is there any exemption or alternative that would apply to my situation? I’d really appreciate any guidance you can offer.
Thanks again!
If you qualify, you can request a waiver of the withholding requirement by submitting California Form 588. Here's a link to that form:
2024, Form 588 Nonresident Withholding Waiver Request
Here's a link to the form's instructions:
https://www.ftb.ca.gov/forms/2024/2024-588-instructions.html