California home sale Capital Gains exempt while Oklahoma resident

[taglcg]

I sold my second home in California in August 2022.

It is exempt from capital gains. California form 593 states that we are exempt from withholding and gains.

Do I still need to do a 2022 California state tax return even though I was not a resident and had no income from California?

I have been an Oklahoma resident since 2021 and filed in both states for 2021.

Turbo tax is indicating it wants me to download the California tax software even though I already completed the Oklahoma return. Any help is appreciated.

[DianeW777]

It depends.  If this was your principal residence at the time of the sale (meaning you sold a home at least two years ago), then you are correct, and any capital gain excluded, not taxed for federal purposes, has the same treatment on the California (CA) return.

Per CA: 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.

CA Income from the sale of your home

If you meet the rules above, then a CA return is not required if this is the only income that is attributable to CA.

[Hal_Al · Accepted solution]

@taglcg said "It is exempt from capital gains."

Assuming that is correct, you do not need to file a California tax return for 2022.  CA follows the federal rules for the exclusion of the capital gain from the sale of your primary (principal) residence.  If you exclude the gain on your federal return, you also so exclude from the state return.  You have no CA source income to report. 

Reference: https://www.ftb.ca.gov/file/personal/income-types/income-from-the-sale-of-your-home.html

But, you also say "I sold my second home in California in August 2022."   To qualify for the capital gain exclusion (exempt from capital gains), the home must have been your principal residence for the required period of time. https://www.irs.gov/taxtopics/tc701

[taglcg]

Thank you. It meets the requirement as it was our primary home prior to moving to Oklahoma. Also Ca Form 593 verified it was exempt from gains.

[taglcg]

Thank you so much. I thought that was the case.

It meets the requirement as it was our primary home prior to moving to Oklahoma. Also Ca Form 593 verified it was exempt from gains.