Sale of home in WA when resident in CA for half year

Forum|Forum|4 years ago
July 2, 2022
8 replies
55 views

We moved permanently to WA from CA in June so we were residents for half of the year. We then sold our 2nd home in WA in about one month later in July. Are we then free from all CA capital gains tax on the sale or do we have to pay 50% of it.

Not A Product Question

Best answer by NCperson

@rhodion - you didn't ask about federal, but unless the WA home was your primary residence for 2 of the past 5 years, it is subject to federal capital gains taxes.

pk_

Level 15

@rhodion , assuming that the situation you are describing is as follows :

1. you and your spouse ( because "we" in your post ) were resident of CA till 06/30/2021 ( ? ) and then moved to WA on 07/01/2021.

2. You took steps to establish your residency in WA ( closer connection, home, banking, voter reg., driver's license, car reg etc. ).

3. You had a second home in WA ( from before ? ) which you now sold. The capital gain is substantial (?).

4. The question now is -- do you have to include this income in a part year resident CA return. Generally, absent any other facts and circumstances to the contrary ( to my assumptions above ) and that your purpose in establishing residency in WA was not solely to avoid paying taxes to CA, the capital gain is not CA sourced income and therefore not taxable by CA during the non-resident period.

Does that answer your question ?

Is there more I can do for you ?

NCpersonAnswer

Level 15

@rhodion - you didn't ask about federal, but unless the WA home was your primary residence for 2 of the past 5 years, it is subject to federal capital gains taxes.

TomD8

Alumni - Champ

[edited] If you were a Cailfornia resident when you received the proceeds of the sale, the entire amount is taxable by California. CA residents are taxed on all income, regardless of its source.

https://www.ftb.ca.gov/forms/2021/2021-1031-publication.pdf

If you were a Washington resident when you received the proceeds of the sale, your capital gain is not subject to California tax. Nor would you have any tax due to Washington, since Washington does not tax capital gains from the sale of real estate.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.