Hi I moved to CA for a year now since mid 2022 and now a CA resident. Before that I lived in WA and I have my primary residence there bought back in 2015, lived in it till 2022 and converted it to a rental. I am thinking of selling it now. It has over 700k of capital gain. Most of the gain is from 2016-2021 when I am still living in WA.
I am wondering that if I sell my house now, for the 700k+ capital gain, excluding the 250k 121 exclusion, does that say 450k gain subject to CA state tax? Thanks!
Yes. any income that you receive while you are a California resident is subject to California tax, no matter where the income is from.
Most of the gain is from 2016-2021 when I am still living in WA.
If you sell the house in 2023, all of the capital gain is from 2023. It doesn't matter how much the value of the house increased each year. You don't have any capital gain until you sell it.
Unfortunately, it would have been better from a tax standpoint to sell the house before you moved.
If California is your state of permanent residence, you owe CA state income tax on all your world-wide income, including this capital gain on property in another state. (If you were required to also pay tax in Washington, CA would give you a credit that would reduce the double taxation, but I don't think the gain will be taxable in Washington state.)
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