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Posted by Bob on April 30, 2008, 9:32 pm
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If I, a resident of California, sell a rental house I own in Hawaii, what
are the tax implications? There will be gains (even in this real estate
market) and recaptured depreciation. Obviously there are federal tax
obligations. But will I also owe taxes both the the states of Hawaii and
California?
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Posted by Ira Smilovitz on April 30, 2008, 10:11 pm
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> If I, a resident of California, sell a rental house I own in Hawaii, what
> are the tax implications? There will be gains (even in this real estate
> market) and recaptured depreciation. Obviously there are federal tax
> obligations. But will I also owe taxes both the the states of Hawaii and
> California?
Yes, you will owe tax to both states. However, one will give you a credit
for some or all of the tax paid to the other. In most cases, you pay the
nonresident state and take the credit on your resident state return, but I
know that California has some reverse agreements so you'll have to look at
both state's instructions carefully.
Ira Smilovitz
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Posted by Taylor on May 2, 2008, 12:25 am
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> If I, a resident of California, sell a rental house I own in Hawaii, what
> are the tax implications? There will be gains (even in this real estate
> market) and recaptured depreciation. Obviously there are federal tax
> obligations. But will I also owe taxes both the the states of Hawaii and
> California?
It's my understanding you only pay state tax in the state in which you are a
resident. However, you pay tax on worldwide income.
You can only be a resident in one state at a time. Since you are a resident
of California, you must pay California state income tax on the sale of the
Hawaii property.
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Ira Smilovitz on May 2, 2008, 11:19 am
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>> If I, a resident of California, sell a rental house I own in Hawaii, what
>> are the tax implications? There will be gains (even in this real estate
>> market) and recaptured depreciation. Obviously there are federal tax
>> obligations. But will I also owe taxes both the the states of Hawaii and
>> California?
>
> It's my understanding you only pay state tax in the state in which you are
> a resident. However, you pay tax on worldwide income.
>
> You can only be a resident in one state at a time. Since you are a
> resident of California, you must pay California state income tax on the
> sale of the Hawaii property.
Your understanding is wrong. Not only do you pay state tax in every state
where you receive income (assuming that state has a personal income tax),
you can also be a resident of more than one state simultaneously. Residents
are taxed on all income world-wide, non-residents are taxed on income
sourced to that state. Credits are usually, but not always, given to reduce
the amount of doubly taxed income.
Ira Smilovitz
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by scott s. on May 2, 2008, 1:32 pm
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>
>> If I, a resident of California, sell a rental house I own in
>> Hawaii, what are the tax implications? There will be gains (even
>> in this real estate market) and recaptured depreciation. Obviously
>> there are federal tax obligations. But will I also owe taxes both
>> the the states of Hawaii and California?
>
> It's my understanding you only pay state tax in the state in which
> you are a resident. However, you pay tax on worldwide income.
>
> You can only be a resident in one state at a time. Since you are a
> resident of California, you must pay California state income tax on
> the sale of the Hawaii property.
>
I think you will find that a non-resident selling real estate situate in
the State of Hawaii is subject to a 5% witholding at time of closing.
See form N-288. Actual tax liability is figured on the annual non-res
individual tax return, N-15.
http://www.state.hi.us/tax/2007/n288.pdf
scott s.
..
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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