# Selling a house in California **URL:** \ **Category:** Factual Questions\ **Created:** [August 4, 2003, 12:45pm UTC](https://boards.straightdope.com/t/selling-a-house-in-california/192877 "2003-08-04T12:45:01Z")\ **Posts on this page:** 7\ **Page:** 1
**Author:** ![magog](https://avatars.discourse-cdn.com/v4/letter/m/fbc32d/32.png) [@magog](https://boards.straightdope.com/u/magog)\ **Post date:** [August 4, 2003, 12:45pm UTC](https://boards.straightdope.com/t/selling-a-house-in-california/192877/1 "2003-08-04T12:45:01Z")
I realize that the Internet isn’t the greatest place to ask about tax advice, but… We own a house in California (well, the bank owns it and we pay monthly morgage). We’re talking about selling, and our roommate says that we get a hefty tax if we haven’t owned the house for two years before we sell it again. Now, I know that buying a house and selling it again within a year isn’t the brightest idea. However, are there taxes specifically to California relating to this? And are they absolute (for example, if I get transferred to another state or find a new job and we’re forced to sell, do we get hit with this tax)? Any sites or cites would be welcome. ---
**Author:** ![Philster](https://avatars.discourse-cdn.com/v4/letter/p/13edae/32.png) [@Philster](https://boards.straightdope.com/u/Philster)\ **Post date:** [August 4, 2003, 3:50pm UTC](https://boards.straightdope.com/t/selling-a-house-in-california/192877/2 "2003-08-04T15:50:08Z")
I think he might be referring to a capital gains tax (federal tax) if you sell and don’t buy a new home within two years. ---
**Author:** ![Ruffian](https://avatars.discourse-cdn.com/v4/letter/r/71e660/32.png) [@Ruffian](https://boards.straightdope.com/u/Ruffian)\ **Post date:** [August 4, 2003, 4:02pm UTC](https://boards.straightdope.com/t/selling-a-house-in-california/192877/3 "2003-08-04T16:02:30Z")
Does sound like capital gains tax. You do have to live in the house two of the last five years, as well as purchase a home of equal or higher value to avoid this tax. _However_–and I’m going on memory here–I seem to recall our tax person saying this is no longer necessarily the case (regarding buying a more expensive home). IIRC, you are allowed up to $250,000 each (or $500,000 for a married couple) in tax-free capital gains in a home purchase/sale transaction. I do not believe these are California-specific laws. Speak to a tax professional (or perhaps one will pop up in here?) for advice specific to your situation. ---
**Author:** ![bashere](https://avatars.discourse-cdn.com/v4/letter/b/779978/32.png) [@bashere](https://boards.straightdope.com/u/bashere)\ **Post date:** [August 4, 2003, 5:12pm UTC](https://boards.straightdope.com/t/selling-a-house-in-california/192877/4 "2003-08-04T17:12:00Z")
> [@](#): > > You do have to live in the house two of the last five years, as well as purchase a home of equal or higher value to avoid this tax. The second half of this is incorrect. To quote the Motley Fool’s website: “The key to the entire plan is that you are allowed to sell a principal residence once every two years and exclude up to $250,000 ($500,000 for a married couple) of the gain on the sale” The article may be found at: [http://www.fool.com/taxes/2000/taxes000428.htm](http://www.fool.com/taxes/2000/taxes000428.htm) The article linked above does a good job of dispelling some of the misunderstandings about the capital gains tax on sale of a primary residence. This is a federal tax issue, not a California specific one. I don’t remember if it is pro rated (if, after living in the house for one year, you get a $125,000 capital gains exclusion) but the article may tell you. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 4, 2003, 9:05pm UTC](https://boards.straightdope.com/t/selling-a-house-in-california/192877/5 "2003-08-04T21:05:28Z")
It used to be the case that you had to buy a house of higher value, not any more. I don’t know of any taxes specific to California - I’ve been here 7 years, and I’m sure I’d have seen someone complaining about it by now if there was. But I’ve never sold a house here, so I’m not positive. ---
**Author:** ![magog](https://avatars.discourse-cdn.com/v4/letter/m/fbc32d/32.png) [@magog](https://boards.straightdope.com/u/magog)\ **Post date:** [August 5, 2003, 12:57am UTC](https://boards.straightdope.com/t/selling-a-house-in-california/192877/6 "2003-08-05T00:57:42Z")
Wow. This has helped a lot. Thanks. ---
**Author:** ![suezeekay](https://avatars.discourse-cdn.com/v4/letter/s/839c29/32.png) [@suezeekay](https://boards.straightdope.com/u/suezeekay)\ **Post date:** [August 5, 2003, 6:15am UTC](https://boards.straightdope.com/t/selling-a-house-in-california/192877/7 "2003-08-05T06:15:20Z")
For the most part, California follows federal law, so I would presume they follow the two year rule on living in a home before sale.