I want to be prepared for capital gains tax I may owe. I file taxes as single and if I sell my CA house, do I get an exemption at both state and federal levels for $250K? Do state and federal handle capital gains tax differently?
I know the cost basis can be adjusted with improvements I have made. Is there any other nuance about capital gains tax I should be prepared for so I am not surprised?
Thanks!
Hi @kgeske ! Thank you for joining us today!
Yes, California conforms to the IRS rules and allow you to exclude up to $250,000 gain on the sale of your home. You only need to complete the home sale purchase in the federal section of TurboTax and and the information will carry to your California state return.
You are correct, you can adjust the basis of your home by improvements. Here is some information you may find helpful.
To properly report the sale of your primary residence gather the following documents:
Using your documentation you can then determine the adjusted basis of the home starting with the home purchase price, plus the costs to purchase the home and any major home improvements. You will also need to reduce this amount by any losses or tax credits.
The sales price of the home is reduced by the selling costs, such as realtor fees, title fees, etc. to sell the home typically listed on closing agreement. Many of these expenses can be substantial.
The adjusted sales price less the adjusted basis of the home will give you your overall gain.
TurboTax is great at guiding you through these questions and helping you to capture all of the related costs and expenses. Here is a link for additional information on items to consider
Thank you!
Melanie, CPA