State of California taxes on the sales of rentals in another state

[fkhalilz]

Hello,

I'm considering to sell my 2 rentals in Texas and then move to California in 2021. I understand that I will owe taxes to the federal government for any capital gains and depreciation recapture.

My question is whether state of California will also tax me on the sales even though these properties are Texas.

Thank you!

[fkhalilz]

Can anyone help with this question please?

[SundayInSalem]

It depends on when you sell your rental properties. If you sell before you become a California resident, then you will NOT have to pay any California state tax on the sale. You will pay California tax if you sell after you become a California resident.

California residents are taxed on income earned everywhere. A rental sale in Texas is taxable to a California resident, but not to a California nonresident. Timing is everything.

The same rules apply to renting. If you move to California but continue to rent the properties for a few months before selling them, any rental income earned while you were a California resident is subject to California tax.

Part-year resident and nonresident