Subject: Moved from California
Date: Fri, 26 Dec 2003
We have lived in California for over four years and lived in our primary residence in Folsom, California for over 3.5 years. On June 25, 2003, we moved to Hawaii. Our house is now pending sale and has been unoccupied since June 25th. The closing was targeted for December 19th with a 30 day maximum to December 28th. The contingent sale of the buyer's property in Oakland fell through, but luckily they had a cash backup offer. However, this is pushing the closing of our property back to January 2, 2004.
Since this property has been our primary residence for two out of the last five years, we qualify for the Federal exclusion on the gain. I assume the exclusion also applies for California taxes as well, right? Are there any tax implications in pushing the closing into 2004?
Also, it looks like since the property was our primary residence of the property for over 24 months, that California will not forcibly withhold 3.33 percent of the sale price... please confirm.
Date: Wed, 7 Jan 2004
Based on what you have told me, it appears the sale of your residence should qualify for the exclusion on both your federal and California income tax return, subject the applicable limitations. (Consult with a local tax person about Hawaii.) Also, the sale should not be subject to California withholding.
IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised
that any written tax advice contained on this website was
not written or intended to be used (and cannot be used) by any
taxpayer for the purpose of avoiding penalties that may be
imposed under the U.S. Internal Revenue Code.