Rental income is reported on your federal return (Schedule E) and your California return; residential rental buildings are depreciated over 27.5 years; California secured property tax is about 1% of assessed value plus voter-approved debt, paid in two installments; and payments of $2,000 or more to a contractor in 2026 generally require a Form 1099-NEC. California does not follow federal bonus depreciation. This guide is general information, not tax advice: confirm your situation with a tax professional.
When are California property taxes due?
Secured property tax is generally 1% of assessed value plus rates needed to repay voter-approved debt, so the total rate varies by location. Regular bills are paid in two equal installments: the first is due November 1 and delinquent after December 10; the second is due February 1 and delinquent after April 10. Unpaid taxes after the delinquent date incur a 10% penalty. See the Board of Equalization’s property tax calendar and Publication 29, California Property Tax: An Overview. Your county tax collector’s bill shows the exact dates; when a date falls on a weekend, check the bill.
How is a rental building depreciated?
For residential rental property placed in service after 1986, the IRS general depreciation system is straight-line over 27.5 years with a mid-month convention, and land is not depreciated. See IRS Publication 527, Residential Rental Property. Rental real estate is generally a passive activity; an owner who actively participates may be able to deduct up to $25,000 of loss against other income, phased out between $100,000 and $150,000 of modified adjusted gross income (IRS Publication 925). Security deposits you hold are not income until you keep part of one; see Publication 527.
Does California follow the federal depreciation rules?
Not entirely. According to the Franchise Tax Board, California does not conform to federal bonus depreciation, and California’s Section 179 deduction is limited to $25,000, reduced dollar for dollar once qualifying property placed in service exceeds $200,000. For rentals, California treats all rental activities as passive, so rental losses generally cannot offset active income except through the $25,000 active-participation allowance. See the FTB’s rental income page and Rev. & Tax. Code § 17255. Ask a tax professional how this affects improvements and appliances you buy.
When do I need to send a Form 1099?
For payments made after December 31, 2025, the IRS says the reporting threshold for Form 1099-NEC is $2,000 for payments made in 2026, up from $600, and inflation-adjusted after 2026. Thresholds for Form 1099-MISC (which includes rents) vary by payment type, so check IRS Publication 1099. Form 1099-NEC is due to the recipient and the IRS by January 31. See the IRS page Am I required to file a Form 1099?.
What does a California LLC owe?
A California LLC generally owes an $800 annual tax, due by the 15th day of the fourth month of its tax year (April 15 for calendar-year LLCs), and a fee if total California income is $250,000 or more: $900 ($250,000–$499,999), $2,500 ($500,000–$999,999), $6,000 ($1,000,000–$4,999,999) or $11,790 ($5,000,000 and up). The fee is estimated and paid by June 15 on Form FTB 3536. See the FTB’s LLC page and Rev. & Tax. Code § 17942.
What if the owner lives outside California?
For California-source rent paid to a nonresident landlord, withholding at 7% generally applies once payments exceed $1,500 in a calendar year. The FTB says a tenant who pays a nonresident owner directly is not required to withhold, but a property manager who collects the rent is. See the FTB’s withholding on nonresidents page and the Form 592 instructions.
Frequently asked questions
What is the 1099 threshold for 2026 payments?
For Form 1099-NEC, $2,000 for payments made in 2026, up from $600 (IRS). Form 1099-MISC thresholds vary by payment type: see IRS Publication 1099.
Can I deduct federal bonus depreciation on my California return?
Generally no: according to the Franchise Tax Board, California does not conform to federal bonus depreciation.
When is the second property tax installment due?
February 1, delinquent after April 10, per the Board of Equalization’s property tax calendar.
Which official sources should I read?
- BOE property tax calendar
- BOE Publication 29
- IRS Publication 527
- IRS Publication 925
- IRS: Form 1099 requirements
- FTB: rental income
- FTB: limited liability companies
- FTB: withholding on nonresidents
This guide is general information about California law as of Nov 13, 2026, and local ordinances may be stricter. Check the linked sources or consult a qualified attorney. Read the disclaimer.
Have a question about your situation, want tips, or need a referral? Email the CLRC team at [email protected]. We share general information, not legal advice, and we’re not a law firm.