Do Individuals Who Move Out of California Still Have to Pay Taxes on Their Property?

When an individual moves out of California, they often wonder if they still have to pay taxes on their property. The answer is somewhat complex and involves understanding different types of taxes, including property taxes and income taxes. This article aims to clarify the situation for those who have moved away from California but still own properties there.

Property Taxes: An Overview

Yes, individuals who move out of California still have to pay property taxes on their California property. Property taxes are a critical component of the real estate market in California and are required to be paid regardless of the owner's residency status. These taxes are managed by the county where the property is located.

Here's a breakdown of the obligations:

State Property Taxes: These taxes are levied by the state of California and need to be paid annually. Even if you’ve moved out, you must continue paying these taxes until the property is sold. County and City Taxes: In addition to state property taxes, there are also county and city property taxes that need to be paid. These vary depending on the specific location of the property. Vehicle Taxes: If you own a car registered in California, you are required to continue paying the property tax portion of your vehicle registration renewal. It's crucial to update your vehicle registration to reflect your new state of residency as soon as possible.

Failure to pay property taxes can result in a tax lien, which can ultimately lead to the sale of the property to recover the unpaid taxes. Therefore, it’s important to stay current with these payments.

Income Taxes: The Difference Between Residents and Non-Residents

It's essential to understand the difference between California residents and non-residents when it comes to state income tax obligations. Here are the key distinctions:

Residents: If you remain a resident of California, you are still required to file a California state income tax return. Even if you’ve moved out, if you continue to work or receive income from California sources, you are liable for state income tax. Non-Residents: Non-residents who have moved out of California do not have to pay California state income tax. However, if they own real property in California, they might still be responsible for property taxes. Additionally, if they receive income from the property, they may need to file a California state tax return.

Specific Scenarios and Obligations

Let's explore some specific scenarios where individuals might have different tax obligations after moving out of California:

Property-Related Income

If you own real property in California but have moved out, you still need to file a California state tax return if you receive any income from that property. This includes:

rental income from a property in California gain from the sale of land in California (such as through a California partnership or LLC)

Regardless of your residency status, you must report and pay taxes on any income you receive from property located in California.

Global Tax Obligations as an American Citizen

Even if you have moved out of the United States, as an American citizen, you are still required to file a U.S. federal income tax return and pay taxes to the Internal Revenue Service (IRS). The IRS website provides detailed information on the specific requirements for U.S. citizens living abroad.

Conclusion

Individuals who move out of California still have significant tax obligations related to their property. While they may not have to pay California state income tax if they are no longer residents, they must continue to pay property taxes on their California property. Additionally, if they receive any income from that property, they must file a California state tax return. Understanding these obligations can help residents and non-residents alike stay in compliance with tax laws and avoid costly penalties.