Taxes Owed on sale of Rental properties in Texas

[vijay R]

Hi,

I'm a California resident and I sold 2 rental properties in Texas this year in July after keeping them 10+ years. Can I wait to pay my taxes on the gains until April of next year or I'll owe penalty. In case If I've to pay penalty how much penalty do I have to pay if my profit is approx 150K. Is there any deadline to pay early taxes on this gain so I don't get any penalty. 

[Juliane22]

Hi Vijay, 

Anytime you owe more than $1,000 by the time you file, you will be assessed a penalty for not paying earlier. The IRS is a "pay as you go" system, they want you to pay near the time you receive the income, so for income received in July, the IRS would expect a payment by September 15, the third estimate tax deadline. So, to avoid as much in penalties as possible, you should go ahead and send in an estimated payment as soon as possible. 

Here is some information from the IRS regarding the payment deadlines and how to pay the estimates: https://www.irs.gov/payments/pay-as-you-go-so-you-wont-owe-a-guide-to-withholding-estimated-taxes-an... 

I hope that helps!

[vijay R]

Hi Juliane22,

Is it ok if I pay by December and don't incur any extra penalty if I pay now vs. by Dec end. Do I also need to figure out how much I owe in California taxes. Also, is penalty amount is similar for Federal and CA. Good thing is that since Tx has no state taxes so I don't need to worry about Texas.

[Juliane22]

Yes, thankfully you don't need to worry about Texas. California has similar penalties to the IRS when it comes to late payments, so you should go ahead and send in estimated payments to them as well. You can pay them at any time, such as the end of Dec, but you may incur a penalty for not having made the payment earlier. Essentially, the earlier you make the payment, the lower the penalty.