Capital gains within California

[Darren Gregory]

Hello,

I am selling my house in Oakland Ca. and moving to San Diego Ca. A friend told me there may be a way to defer capital gains taxes if purchasing a home within a certain time frame. Does anyone know anything about this? It was my understanding that I will get a 250k deduction but that was essentially it other than investments I've made to my current home. Any other savings suggestions when it comes to capital gains taxes?

Much appreciated and thank you

Darren

[Brian Schmelzlen]

Hi Darren,

Diane and Michael are correct; under Section 121 of the Internal Revenue Code you (as a single individual) can exclude $250,000 of capital gains from your taxes if you have owned and resided in the house as your personal residence for 2 out of the 5 years prior to the date of sale.  There are additional rules relating to this, but that is the gist of it.  California conforms to this, so you also would be able to exclude the gain from your California income taxes.

I don't know your age so this may not apply, but under Prop 60 if you are 55 or older there is a 1-time chance to transfer your property-tax base from your old primary residence to your new one.  There are a number of rules relating to that, so if you meet the age requirement you should talk to someone about this.