By Dale Martin
If you’re trying to escape either of these eventualities, the “escape velocity” has become even more difficult, at least as to tax.
Many folks who own real estate for trade, business, or investment defer capital gains through the use of a 1031 exchange. For tax purposes, California law follows federal law in this area pertaining to “like kind exchanges.” Now, with the adoption of Revenue and Tax Code Sections 18032 and 24953, on Jan. 1, California residents who acquired out-of-state property must file an informational return with the state Franchise Tax Board. This closes the net around those who were trying to avoid paying taxes in California for income earned on out of state property. As you might expect, there is a down side for not filing the informational return.
On another front, home buyers, sellers, and their agents should be aware that requirements for the transfer disclosure form will be revised effective July 1. The new form will beef-up disclosures pertaining to any construction defect, or building code violations for the benefit of a buyer who may not be aware that the original owner filed a claim against the home builder.
Laguna Beach attorney Dale A. Martin is a real estate broker and senior counsel for the Irvine-based law firm of Malcolm Cisneros. Reach him at (949) 303-0191, or dmartin@martinlawbiz.com
