CA Claw-back on 1031 exchange sold on installment - Spidell

CA Claw-back on 1031 exchange sold on installment

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Message Board CA Claw-back on 1031 exchange sold on installment

This topic contains 1 reply, has 2 voices, and was last updated by Lynn Freer 2 months, 2 weeks ago.

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  • #165450
    Susie Booker
    Participant

    We have a client who is an Oregon resident (formerly a California resident), who has rental real estate property in Oregon. This property was part of a 1031 exchange in 2014. The gain on the property was $295k, and the California “claw-back” portion was $150k. This client is considering an installment sale on this property. Our question is how will California tax the installment sale income? Will it be taxed as the income is received, or in full at the time of sale?

  • #165569
    Lynn Freer
    Participant

    It would still be taxed as received. However, I think you would use the $150k as the taxable portion to compute the gross profit percentage. So a smaller amount would be taxable to CA than federal.