Unfortunately I don't believe this is correct, unless I am missing something. I just chatted with the California Tax Board on their Website and this is a paste of my chat. From what they say, there are no exemptions on any gain received on the sell of residential property--it is all taxed as ordinary income in the state of California. Please read and give me your feedback.Chat from California State Tax Website
I am selling my personal residence in California. I have lived in it for more than two years. The gain is less the 100K so I know that I am exempt from Federal tax on this, but was wondering what the California tax would be on this gain. Thanks for the help.
Mike • 1:57 PM
You are now chatting with Timothy
Hello. This is Timothy at Station Number # 2124.
Timothy • 1:58 PM
Hello
Mike • 1:58 PM
Is this a gain or loss?
Timothy • 1:59 PM
Gain
Mike • 1:59 PM
Hello?
Mike • 2:00 PM
California does not have any special tax rates on capitol gains, capitol gains is treated as normal income so it would be subject to the normal tax rate of income earn in California
Timothy • 2:01 PM
So there is no exemption as there is for Federal Tax in regards to any gain in selling a residential property?
Mike • 2:02 PM
What if I use the gain to purchase another residential property, does this have an impact on the tax?
Mike • 2:03 PM
Capital gains are taxed at the same rate as ordinary incomeregardless of the holding period of the asset.
Unlike federal law, California treats capital gains as ordinary income and does not give favorable lower rates to capital gains. The amount of California tax is not dependent on the holding period because there is no distinction between long-term and short-term capital gains.
Timothy • 2:03 PM
No, it would not impact the tax on your gain, if you turn around to buy another house
Timothy • 2:04 PM
Ok. I appeciate your help with this. To make sure I understand this correctly if my gain was 50,000 and my AGI was 100,000 for California, then the 50,000 gain would be stacked on top of the 100,000 AGI and taxed according to the State Income Tax Rate. Is that correct in a simplified way?
Mike • 2:05 PM
That is correct, you understand it [Edit added 04/20/18 by a SuperUser ... Wrong! That is NOT correct.]
Timothy • 2:07 PM
Great. Thanks for the help. California is making it harder and harder to live here! :-). Is there a way for me to print this out for my future reference?
Mike • 2:07 PM
No, but you can copy then paste this chat into MS Word or Note Pad to save then print out
Timothy • 2:08 PM
Very good that is what I will do. Thanks.
Mike • 2:08 PM
If you have no further questions, I will disconnect this chat in 2 minutes. Once the session is closed you will not have access to the chat
Timothy • 2:08 PM
