Should I file CA propery taxes as non-resident ?

[jackkgan]

I did not live for more than few days in CA in 2025.

But I purchased a single-family home in Merced, CA mid- December 2025 and placed it in service as a rental property later that month. Should I still file CA taxes as non-resident?  Also, will there be other benefits such as helping preserve CA loss carry forward?

Timeline:

• Property purchased: early December 2025
• Property listed for rent: December 14, 2025 (listing went live through a property manager and syndicated to rental sites)
• Tenant moved in: February 2026

[TomK2023 · Accepted solution]

You established a "California-source" business activity (purchased and listed the property in 2025 as a rental).

Even though the tenant didn't move in until 2026, the IRS and the California Franchise Tax Board (FTB) consider a property "placed in service" the moment it is available and listed for rent (December 14, 2025).

Thus, you can begin claiming pro-rated expenses for 2025 (depreciation for the last 17 days of the year, property management fees, advertising, etc.).

You generally must file a Form 540NR if:

• You have any California-source income (even $1 of gross rent) .OR 
• your worldwide gross income exceeds CA’s filing threshold (for 2025... $22,941 for a single filer under 65).

Filing a 2025 return allows you to "document" any start-up costs.  California allows you to carry-over passive rental losses to future years to offset future rental profits.

1. Open or continue your return.
2. In the "Personal Info" section, set your Resident State to your actual home state. 
3. Select California (when the program asks if you "earned money in another state", This will generate Schedule CA (540NR), which separates your total income from your CA-source income.