California: State starts withholding taxes on sale of vacation property

The San Jose Mercury News ^ | Sat, Jan. 18, 2003 | Sue McAllister Mercury News

[Ernest_at_the_Beach]

Legislators trying to close the state budget gap are forcing many Californians to pay the state government for taxes they don't actually owe.

As of Jan. 1, California residents must hand over 3.3 percent of the total sale price when they sell investment or vacation properties -- even if they made only $1 in profit on the sale.

[Ernest_at_the_Beach]

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[snopercod]

It's too bad the california press didn't mention this little detail before the November elections. But then it probably wouldn't have mattered anyway. After all, only "the rich" own real estate...

[greydog]

It takes money out of the pocket of the investor that very possibly could have generated another transaction,'' Rose said. ``I think it will affect the economy".

No $hit

[EggsAckley]

This is like a check kiting scheme! Thank God we closed escrow on our Tahoe house on Dec. 31!! That's the day the money was funded, so I'm assuming they won't be able to nab us.

[EggsAckley]

I'm not positive, but I think this skanky POS was proposed AFTER the elections. Thanksgiving weekend, I believe. Very quietly.

[TightSqueeze]

As of Jan. 1, California residents must hand over 3.3 percent of the total sale price when they sell investment or vacation properties -- even if they made only $1 in profit on the sale.

Vacation properties, Vacation Properties! Proletariats living in the peoples republic of California should not be owning vacation properties. 33% is nothing, they should be thankful that these outrageous luxuries are not confiscated and distributed to the poor. This ain't your forefathers America, besides we're fixin' here to fight a war!

[kellynla]

It will be interesting to see if the legality is challenged in court. After all won't they at least being required to pay interest on the funds? I know I questioned the realtors about this last year and they all kind of muttered they didn't know the specifics. How convenient!

[ex-Texan]

Howdy E.A.

California is notorious for violating the law with inventive taxation schemes. A few year ago, I advised a man who was being taxed illegally on his retirement. He had moved from the state, but they were taxing him on money paid out of a retirement fund because the company he had earned the money with was based in California. Told him such a scheme violated the Constitution, federal and possibly even state law. He filed suit and California 'caved in' and settled before the matter gained major publicity.

[tubebender]

It will be interesting to see if the legality is challenged in court.

Let's hope some judge is persuaded to issue an injuction soon.

[Too_Bad]

What a shameful grab by CA this is. Californians already are subject to quarterly estimated income tax wherein the income tax on capital gains would be remitted to the Franchise Tax Board by Jan 15. CA is so desparate, they've put their hands into the gross sale price of the transaction.

[KC_for_Freedom]

It got enough publicity, I was planning on retiring out of California from a company inside of California. We were quite worried about this tax approach.

California also taxed anyone bringing a vehicle into California with a tax that was later declared illegal but the state then made everyone apply for the refund. There you have a free loan and of course the state kept the money if someone did not know they had to apply.

I am so grateful that I sold our house before this law came into effect. What a great state to leave!

[Gophack]

I remember hearing about this last year. It's bad public policy and bad law -- another gimmick to get Gray Davis out of the mess he made of California's finances.

I wonder if there is anything that can be done to suspend the law, put it on hold temporarily until it can be rescinded? Maybe we should all be contacting our legislators to repeal this.

[kellynla]

We won't hold our collective breaths now will we...chances of a CA judge ruling against this are slim and none and slim just left the state...more likely some ambitious citizens will have to file a class action lawsuit...

[Dog Gone]

This is incredibly bad public policy, and I think it's subject to legal attack on several grounds.

This is no different in theory than a law requiring 50% of your paycheck to be withheld for California income taxes, although the excess amounts would be refunded next year.

[Happy2BMe]

Perhaps this will give you some added insight into why California is in the current state it finds itself in:

Southern California: record poverty and industrial decay.

"Many in these low-wage jobs are immigrants with low education levels, mostly from Mexico and Central America and especially to Los Angeles. These often highly exploited immigrants have contributed to the increased levels of poverty. The majority of people living in LA County now are either immigrants or second-generation Americans."

[fred flinch]

They reelected Davis so they got what they deserve!

[Happy2BMe]

"This is incredibly bad public policy, and I think it's subject to legal attack on several grounds."

Not as "incredibly bad" as what the kooks in Sacramento have tried in the past.

Namely, taxing military retirees pensions if they so much as ever once were stationed at a military base in California.

This tax would be imposed on the military retiree regardless of whether they lived in California after separating from the service or leaving California.

Does this give you some idea how desparate the socialists in Sacramento are (and have been) to bail out the state's self-imposed bankruptcy by attempting to support millions of illegal aliens?

[Paleo Conservative]

The law was passed in the fall so quickly that real estate industry lobbyists said they had no time to fight it.

California needs to limit the length of sessions of the legislature. I'm glad the Texas legislature meets only 140 days every two years for the regular session. This means the Texas legislature has been out of session for over a year when they stand for re-election. The members of the legislature don't get the opportunity to pass ill-considered legislation just prior to the elections.