What happens to nonresidents of California regarding capital gain income from the sale of California property?

When nonresidents of California sell property located within the state, the capital gain income generated from that sale is fully taxable by California. This principle is grounded in the fact that states have the authority to tax income derived from property situated within their borders. Therefore, even if the seller does not reside in California, the income generated from the sale of California property is subject to California state taxes.

This is an important consideration for nonresidents who are involved in real estate transactions in California. They must be aware that the state’s tax laws will apply to them, and they will need to file state tax returns to report that income. Understanding this requirement ensures compliance and helps nonresidents accurately estimate their tax liabilities connected to real estate assets in California.