In non-community property states a husband/wife LLC is supposed to be treated as a partnership  And transferring from a revocable trust (reported on your 1031) to a partnership LLC (that files it's own tax return) is changing the tax payer. 

Even if you create a non-CA LLC, if you are managing the business from California, you will likely be deemed to be "doing business" in California and therefore likely subject to CA taxes.

With good software available so readily I'd say nah, but you have a partnership with non-family.  

And an argument could be made that since she doesn't own more than 50% of the property that the entire ownership structure of the property equates to a non-related party for you (much like an LLC). 

Please - do this today: Send her a Notice To Quit for Non-Payment of Rent; you will need to send this to her via USPS with proof of delivery required so you can use it in any legal proceeding.

They have no Deed, so there is no foreclosure, just eviction for breach of contract and non-payment of dues.

The rates vary throughout the State because of the different millage rates and tax districts, but in Richland County for instance, the taxes essentially triple once it goes from legal resident to non legal residence. 

@Samuel Coronado - cash flow on new builds here right now is fairly non-existant without putting more than 20% down. 

If I identified the offender, I would probably bill them back for the wasted water and when they didn't pay evict them, or non-renew them if their lease was near the end because that is simpler. 

It’s no longer a question of if your coverage will be non-renewed or your costs will spike, but when.