WA resident moving to CA and sell primary residence in WA

[FocsSpeed]

Hi,

I am relocating from WA to CA by the end of the year. My primary residence has appreciated a lot and when I sell, there will be significant capital gain even after 250k deduction. My question is, if I move to CA first and then sell my house in WA in the following months, will the gain taxed by California? Looking at the documentation, CA tax income of all source even when I become part-year resident. Does that mean I have to sell my home in WA while staying in WA to avoid being taxed by CA?

Thanks!

[TomD8 · Accepted solution]

Your capital gain is taxable by California if you are a California resident when you receive the proceeds.

https://www.ftb.ca.gov/forms/misc/1100.html

[Jasonbkim]

I’m in a similar boat.  I’ll be selling my home and will have significant capital gains above the 500k deduction.  All proceed will go into a home purchase in California.  I plan on moving +/- a week before a week before my home closes.  Would I be considered a California resident?  Or , will I need to physically move after closing / receiving funds?

[TomD8]

Per CA FTB Publication 1031:

"When you are in California for other than a temporary or transitory purpose, you are a California resident."

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

You may also want to read Change of Domicile on page 10 of that reference.

If you have constructive receipt of the proceeds from your home sale after you become a CA resident, then they are taxable by California.  Constructive receipt of income is a tax term which determines when a cash-basis taxpayer has received income. Constructive receipt of income occurs when a party obtains income that is not yet physically received but has been credited to the taxpayer's account and over which they have immediate control.