Originally Posted by bmcgonig
I'm confused by the above statement. Doesn't California tax yourr gains whether you buy in CO or not? And since the Colonel only has $150k equity, I'm assuming that he's below the $500k capital gains exclusion? Does that exclusion apply to CA state taxes as well?
It's been a while since I've sold a primary residence, but I believe that the gains are taxable unless you (1) are over age 55 or (2) roll the cap gains into another property.
The CA state tax bureau sent us a threatening letter several years after we sold a property and moved to Hawaii. The letter implied that we'd realized cap gains and so had to pay cap gains taxes. It even included a helpful coupon to fill out with our payment and a pre-addressed return envelope.
In very fine print on the bottom of the fourth page, it mentioned that different IRS rules might apply to some people. It left it up to us to figure out exactly what those rules might be and whether they applied to us.
However I wonder how many people would have read that far and would have just paid the tax. I resented the state's effort to intimidate military servicemembers into needlessly paying taxes.