Yes. The gain on the sale of property, located in CA, is CA source income.
But you may qualify for the home sale exclusion. CA follows the federal rules.
Individuals
You do not have to report the sale of your home if all of the following apply:
- Your gain from the sale was less than $250,000
- You have not used the exclusion in the last 2 years
- You owned and occupied the home for at least 2 years
Any gain over $250,000 is taxable.
Married/Registered domestic partner (RDP)
Married/RDP couples can exclude up to $500,000 if all of the following apply:
- Your gain from the sale was less than $500,000
- You filed a joint return for the year of sale or exchange
- Either spouse/RDP meets the 2-out-of-5-year ownership requirement
- Both spouses/RDPs meet the 2-out-of-5-year use requirement
- Neither you nor your spouse/RDP excluded gain from the sale of another home in the last 2 years
