Is it time to dump your rentals?

If you are finding that you are getting tired of toilets and tenants and not certain ths hassel is worth the rewards, this might be the best time to put it on the market.  Give me a call if you need to get out from under your rental property.  This is the latest information about Tax Withholding for Rentals in California.
Real estate withholding is a prepayment of California state income tax for out-of-state sellers of California real property. Escrow companies are required to collect 3.33% of the sale proceeds and send to the state on behalf of the sellers.

Now they are hitting the rents too:
Beginning January 1, 2010, property managers will have to withhold 7% of all income, that exceeds $1,500, on properties owned by nonresidents to be sent to the nonresident property owner, unless the owner qualifies for reduced or waived withholding.

This brief Legal Q& A and the FTB Summary Chart of the Withholding Process address the most basic questions. Additional guidance is available from the FTB and tax professionals. (For all the legal citations and FTB authority, see page 4 of FTB Publication 1017 (rev 06-09), Resident and Nonresident Withholding Guidelines.)http://www.ftb.ca.gov/forms/2009/09_1017.pdf

Q 1. Who is a California nonresident property owner subject to withholding?
A Nonresident owners include the following:
. Individuals who reside outside of California,
. Corporations, Partnerships and LLCs who do not have a permanent place of business in California or who are not qualified by the Secretary of State to do business in California, or
. Estates and trusts who are nonresidents of California.

Q 2. Who is exempt from withholding?
A Those persons or entities exempt from withholding include the following:
. California residents,
. Corporations, Partnerships and LLCs qualified to business in California or who have a permanent place of business in California,
. Estates where the deceased was a California resident at the time of death,
. Nonresidents when the payments do not exceed $1,500 in a calendar year,
. Tax exempt organizations,
. California nongrantor trusts,
. A nonresident owner who has received either a Waiver or Reduced Withholding Exemption from the FTB.
NOTE: One fairly simple method for nonresident owners to be exempt from withholding is for them to form a California Corporation, Partnership, or LLC, or to have their foreign (out-of-state) Corporation, Partnership, or LLC qualified to do business in California with the Secretary of State. Depending on the income generated by the rental property, the cost of forming and maintaining such an entity may be justified to avoid withholding.