Could waiting to sell real estate for tax reasons cost you money?

March 8, 2004

Subject:  Market timing and tax timing advice

From:  Peter
Date:  Mon, 02 Feb 2004

I think your advice to wait until the end of the year to sell California real estate is a little scary. The delay of a few weeks in selling a house can make the difference in tens of thousands.


Date:  Mon, 01 Mar 2004

Hello Peter,

You are right. The tax tail shouldn't wag the dog. Some people have written to me that the California withholding from the sale of real estate is creating a financial hardship. When the sale is made at the end of the year, the seller may be able to recover an overpayment in a short time by claiming a refund on his or her California income tax return. People who are selling California real estate should get a projection of their cash position when they sell, and make the best decision for their circumstances. (Remember most sales of principal residences aren't subject to withholding.)

Good luck!
Mike Gray

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Michael Gray, CPA
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