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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11366
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My parents moved to state 9/01/2013, they sold their home in

Customer Question

my parents moved to Washington state 9/01/2013, they sold their home in California in 2014 (it was never rented) they did buy a home in Washington, do they owe taxes to California, both are on social security and a penision.
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: no, both are in their 80's and we assist in taking care of them (my husband and I)
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.

Hi, I can help here!

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It's possible that they do not owe any taxes at all

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IRC §121 allows for an exclusion of capital gain on the sale of a primary residence ($250,000 for single filers and $500,000 for those married filing jointly)

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If the gain on sale was less than $500,000 there is not capital gains reported, hence no capital gains tax.

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They likely signed something at the closing that declared that the property was their primary residence, hence there would have been no 1099-S

Expert:  Lane replied 1 year ago.

Capital gain is Net sales price MINUS Basis in the property

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Basis is their purchase price PLUS any improvements they have made to the property

Expert:  Lane replied 1 year ago.

California also recognizes this exclusion for state tax purposes as well

Expert:  Lane replied 1 year ago.

I hope this has helped.

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Please let me know if you have any questions at all.

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If this HAS helped, I'd really appreciate a positive rating (using the rating request, faces, or stars on your screen)

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That's the only way I'll be credited for the work here.

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Thank you!

Lane

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