Sale of Primary Residence after moving out of that state.

[popeye20]

We moved from California to Idaho establishing permanent residency effective 1/1/2023. All financials were transferred to Idaho effective 1/1/2023. We had no California income in 2023 other than the sale of our former principal residence which sold in April 2023. We filed the CA 593 under the IRS 121 Personal Residence Exclusion as no income taxes were owed. Do we have to file California State Taxes regarding this sale and if so I assume it would be as a non-resident.

[tagteam]

A nonresident with California source income (gain).

[popeye20]

No taxable gain as it had been our personal residence and qualified for the exclusion from Federal and State income tax. 

[tagteam]

Correct, but the state and federal government only sees the sales price; they need to know your adjusted basis in order to calculate any gain (or loss) and only you can provide them with that information.

[popeye20]

The CA 593 is filed with the state at close of escrow. It certifies that no withholding of proceeds for taxes is necessary based on IRS criteria under 121. So, no taxes owed. A 1099-S is issued which shows a sales price below the threshold so even if the sales price was all capital gain it still wouldn't be taxable under 121. Since we had filed the 593 with California, I hoped to avoid filing 2 state income taxes.  The Federal Turbo Tax return did ask for the sales price and basis confirming that no taxes were owed. 

[tagteam]

That would almost certainly be sufficient then.

[popeye20]

Thank you. I was hoping for a more definitive answer and I'm still researching this issue. Almost certainly is good but not quite where I would like to be on this question.

[AmyC]

The CA FTB has requirements for filing paperwork. You can be required to file even without a tax liability. There is a difference between CA income and CA taxable income.  Step one is to see if you are required to file a tax return. Click here to determine your filing requirement. I would bet that you have to file just to prove you don't have a tax liability.

[popeye20]

I've been to the FTB site and found some conflicting information. I believe that I will need to file just to show my income is exempt. Now my problem is I had already filed out my fed and resident state forms and it appears I will need to file a 540NR first but as I had already downloaded my resident state that is not being offered. It appears I have to delete my resident state return to access the CA 540 NR as the included state and then order and pay for my resident forms. I had intended to pay for the additional state so that is not the issue. Having to fill out the non-resident forms first seems to be the problem. 

[AmyC]

You should be able to add a state online or desktop regardless of the residency situation. Are you in desktop or online? If you are online, you can go into personal and change your state of residence. The program will add the new state quickly and then you can correct the situation.

We do ask you to fill out the non-resident form first to calculate the tax liability and give credit on your current state return. If you are filing CA and will not have a tax liability affecting your current state, you can fill out CA after finishing your current state of Idaho.