Thinking about Leaving California

9 Replies

Hi all, This is my 1st post on BP! Im looking into selling our primary residence a Single Family home in San Diego CA. My goal is to sell our home and defer taxes using 1031 exchange or section 121 ( I'm not sure which is correct for my situation) take the proceeds to 

1. Buy a new primary residence in a new less expensive less dense market 

2. Purchase 1st MFR rental property

I'd like to accomplish all this while moving to a city where I can raise my young multi-ethnic family that's accustom to a Starbucks and Target on every corner. I'd love to hear thoughts on potential markets. Thanks!

Hey @Chris Brown

Welcome to BP, nice to meet you on here. I'm a local realtor here in San Diego that also invests in properties out of state. If you are selling your primary residence you may not have to pay any capital gains tax.

Lots of different factors at play when it comes to choosing where to invest and even more when deciding where to move. Feel free to connect and I can give you my thoughts about investing out of state. 

@Chris Brown

There is moving out of state and investing out of state, sound like you’re considering doing both! Investing out of state you can do from SD or whatever city you end up moving to. Moving out of state think about what you want - diversity, weather, international airport, mountains, etc. for investing out of state look at numbers for living out of state pick what you like. There are a lot of cool cities in America I’ve been exposed to investing out of state myself!

@Lee Ripma thanks for the insight. I'd like to combine both of those ideas, a place with all our wants (Bend Oregon but a little more diverse) and where the numbers make sense from an investing standpoint. Thats not shade on Bend I've only been looking at internet statistics on poverty demographics.

Originally posted by @Chris Brown :

Hi all, This is my 1st post on BP! Im looking into selling our primary residence a Single Family home in San Diego CA. My goal is to sell our home and defer taxes using 1031 exchange or section 121 ( I'm not sure which is correct for my situation) take the proceeds to 

1. Buy a new primary residence in a new less expensive less dense market 

2. Purchase 1st MFR rental property

I'd like to accomplish all this while moving to a city where I can raise my young multi-ethnic family that's accustom to a Starbucks and Target on every corner. I'd love to hear thoughts on potential markets. Thanks!

 I am very pro coastal So Cal investing, but that is not the primary purpose of my response. 

You cannot 1031 your primary home.  1031 are only for investment properties.  However, if you lived in the home 2 of the last 5 years you do not need to 1031 it.  If you have lived in the home at least 2 years, you should get a $250k/$500k (married) home sales tax exclusion.  

Good luck

@Chris Brown Like @Dan Heuschele and @Lee Ripma said, the 121 exemption is for your primary residence.  If you've lived in it for two years now it's eligible for you to get the first $500K of profit tax free just by selling it.  Actually a much better deal than the 1031 because it is tax free and no reinvestment requirement.

However, if you have more than $500K of gain in that house you may want to consider moving out and converting it to a rental for a year or so. Use equity from the house to establish your new home but retain ownership.


Then when you sell you'll still be eligible for the primary exemption as long as you've lived in for two of the last five years.  And you'll be able to defer the rest of the gain by doing a 1031 on the rest because the property would be currently used for investment.

Originally posted by @Chris Brown :

@Lee Ripma thanks for the insight. I'd like to combine both of those ideas, a place with all our wants (Bend Oregon but a little more diverse) and where the numbers make sense from an investing standpoint. Thats not shade on Bend I've only been looking at internet statistics on poverty demographics.

Bend is very diverse, they offer so many different colors of Patagonia jackets up there! ;)

@Chris Brown I am hearing that a lot from my friends who are investors in California.I invest just south of Nashville Tn.Nashville has landed Amazon Corp.headquarters,Google hq,as well as many others.The outer areas are wonderfull investing areas.We have plenty of Starbucks and target stores.The state also has 0 income tax.How much would that save you?

If I can help in any way lmk.

Best of luck!

@Chris Brown I wish you the best of luck!  I am facing the same decision but not quite the same family circumstance.  Diversity is key for me as well.  Coming from NYC and DC, I am used to certain things that you don't get in a lot of other states.  However, I am a car guy and love all that comes with that from the west. I live in a 4 level townhome in LA and I now have a knee disability and need a one level home.  Tired of the taxes and other things with California but want to be able to enjoy driving my car thru the hills.  Also want to invest but can't decide to sell or not.  Good luck with the decision!