Dear Rental Owners,

Effective January 1, 2010 the CA-FTB in their effort to collect more money for the State has reinterpreted a law on the books that will affect Out-Of-State Property Owners. If you aren’t filing your income from rental property in CA with the State of California you will now need to report Quarterly 7% of the rent received.

Why do I care? Well, as a property management company the CA-FTB is looking to us to enforce this. We now have to withhold 7% of our Out-Of-State Owner’s rental income monthly and send it to the State quarterly or we could be fined.

There has been no education on how to do this, no info in the mail to us but the word is they will start enforcing this new interpretation of the law January 1, 2010.

So, those of you out of state owners please check with your accountant and go to the CA-Franchise Tax Board website to find out what you need to do to comply and not receive a penalty.

My understanding is you will file your taxes showing you reported the income and you will get the refund if you have already paid but like most of us that pay quarterly taxes the government wants their money now not at the end of the year after all write offs and expenses have been taken.

Seek counsel from your CPA.

I will be sending notices to all my out of state property owners asking them to sign a waiver that they already report their income to CA or I will have to start withholding the 7%. Unfortunately, this means I will also need to charge for this extra accounting and compliance with the state.

My suggestion if you are not inclined to pay more tax is to write your local CA politician and protest this interpretation of the law. This is what the professionals are doing but the more voices the better.

Kathleen
Broker/Owner

PS. check out our current listings of Santa Cruz Rentals.

This entry was posted on Wednesday, September 9th, 2009 at 12:17 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.