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I am planning to move to Texas early 2018. If I lease my California principal residence for 9 months, while waiting for my new home in Texas to be built, and then sell the California house 9 months later, will I pay Texas capital gain tax or California capital gain tax? I anticipate to make a huge capital gain tax on California residence (approx. $700,000) and I can only shelter $250,000 as a single tax filer.

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    How many years have you lived in your CA house?
    – Hart CO
    Oct 23, 2017 at 2:50
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    So you plan to sell in 2019 after being a CA resident for part of 2018 and a TX resident for part?
    – Brythan
    Oct 23, 2017 at 2:54
  • Hart CO I have lived in CA house for 20 years. Both children have grown and the last child is moving to college in May 2018. I am now ready to downsize and relocate to Texas where my sister lives.
    – cf2017
    Oct 23, 2017 at 23:53
  • Brythan Yes I plan to sell the CA house in May 2018 and then immediately move to Texas in either May or June 2018 (can't afford to live in Los Angeles). I am not sure how to treat the capital gain when selling the house next year.
    – cf2017
    Oct 23, 2017 at 23:54
  • A tax advisor would be a good investment. CPA or tax lawyer. Should be worth a couple thousand dollars to get the advice, and probably won't cost you that much. I'd expect a free consultation, and an estimate of how much they would charge to advise you on how to proceed in order to minimize the tax burden and stay out of jail at the same time.
    – Xalorous
    Nov 29, 2017 at 17:17

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I can't give tax advice and you should speak with a tax professional. You may also want to work with a financial planner to review your overall financial situation (particularly if you have unrealized losses in other investments). You may find the following information from the California Franchise Tax Board website useful:

"The gain or loss from the sale of real estate has a source where the property is located. If you sell your California real estate and move out of state, the gain is taxable by California. The gain is taxable by California even if the real estate is sold when you are a nonresident."

Source: https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents-Part-Year-Residents.shtml#RealEstate

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