Tax withholdings for investment property?

Question

I heard there is no tax withholdings for a CA resident if investment property is in NV, because NV is a no tax state. Is this true?

I think I asked the Q wrong. The escrow company when I closed the home said since I don't live in NV I don't need to withhold 3 1/3 right now and I will just file end of the year. But my accountant says I still need to send in the estimate now and then the rest of the tax if needed end of the year.

Answer 1

Income taxes on an investment in Nevada are taxable to a California resident. The issue here is not where the investment/profit is generated, but where the recipient of those profits resides.

The issue of non-withholding is quite irrelevant. What counts is the tax return filed at the end of the fiscal tax year.

Answer 2

It sounds like maybe the escrow company was talking about some kind of state tax.

For federal, your accountant is correct - either pay quarterly estimates on your investment income, or be subject to penalties if you don't have enough withheld.