As a Washington resident what taxes do I pay on the sale of California property

by Rob Seltzer, CPA, PFS

Q. We’d like to sell a house in Oceanside that we bought in 2007 and have rented since. We think we could make at least $100,000 profit on the sale. So what would be our capital gains tax? Does it matter that we live in Washington state?

Because the property is in California, you must report the gain. Unfortunately, because Washington does not have a state income tax, you will not get a credit in your home state as most out-of-state property owners do. California has no capital gain rates. All income is taxed the same. California has several brackets. For married taxpayers, if you have a taxable income of $99,548, the tax is $4,383 and 9.3% of the amount over that threshold. There are higher brackets than the 9.3%, but they would not pertain to your situation. Another issue to keep in mind, is that all of the depreciation that you have deducted since you bought this rental in 2007 will be recaptured and will reduce your cost basis and increase your gain.

Rob Seltzer is principal of Robert Seltzer, CPA, PFS, in Los Angeles. You can reach him at (310) 278-9944.

Have a question for a CPA. Ask it here.