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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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i sold a house in California in 2007 for 440k and net capital

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i sold a house in California in 2007 for 440k and net capital gain of 226k. i moved to ohio that same year, but didn't file california personal income tax return. Now, 2009 i got a letter saying i owed 18k, cause the money i made from selling my house in 2007 was taxable. i thought i am exempt, cause i made less than 250k for being single and lived at that house for well over 2 years. Do i just need to file the california personal income tax and then i won't owe anything?

thanks in advance, big headache.
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.

When you sell a home, the sale proceeds are reported to you on a 1099 form, and a copy of that same form goes to the IRS and to the state where the home was sold. So the state knows you made a sale, but they do not know that this was your primary residence and that it qualifies for an exemption until you file a return and claim it.

California allows the same exclusion of $250,000 that is allowed by the IRS. But you first must file a return with California and report the sale and claim the exclusion. Once you do that, you should owe no tax on this transaction.

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Thank youCustomer

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