A taxpayer has active and material participation in a rental real estate activity reported directly on their personal return. Is this an active or a passive activity for tax puposes for the State of California? (Look at the explanation as much as the actual answer.) Real estate rental activity is always considered active for the State of California. It's considered active for the State of California due to the level of participation. Passive activity for California, unless the activity also rises to the level of a real property trade or business. Passive activity for California, since California never allows personal real estate rentals to be considered anything but