California State capital gains tax for sale of an out-of-state house sold in Washington state

[cgoodison]

I arrived in California on 5/11/22, which also was the closing date for my new CA house.  On 4/12/22, I hired a WA state realtor to list and sell my WA house (which I had owned and lived in since 1983).  The house was staged and then listed on 5/19/22 and was under contract on 5/24/22; the WA house sale closed on 6/28/22.  Does California have the right to assess me capital gains tax for the sale of my WA house, since the sale occurred weeks after I arrived in California on 5/11/22?  Thanks.  CDG

[MaryK4 · Accepted solution]

Yes, if you established California residency on May 11 and  the house closed on June 28, 2022, California can tax the income under the residency rules.  

[cgoodison]

Hi MaryK4: So, California can assess tax on the full taxable capital gain, simply because I was a CA resident when the WA house went under contract and closed and payment was issued to me?  Is there any way to pro-rate any of the capital gains tax?  Is there any setoff for the capital gain tax to be paid to the IRS?  Thanks.

 MaryK4

Employee Tax Expert

Yes, if you established California residency on May 11 and the house closed on June 28, 2022, California can tax the income under the residency rules.  

[cgoodison]

So, CA gets the full capital gain tax even though I was only in CA for 48 days.  Is there no way to pro-rate down to a lesser amount?

[MayaD]

CA will tax all your capital gain because you earned that income while you were CA resident. As MaryK4 mentioned California will tax the income under the residency rules.  

As a California resident, you are taxable on any income, no matter where you earn it. Therefore, no matter what state you have property in, you would have to report the gain to California.