How California Taxes Your Home Sale After You Move Out of State

Quick answer: Yes, California can still tax the sale of your Simi Valley home after you move to another state. The Franchise Tax Board (FTB) treats the sale of California real property as California-source income, so it's taxable by California no matter where you live when escrow closes. The good news: California follows the federal home-sale exclusion, so if the house still qualifies as your main home, up to $250,000 of gain ($500,000 for most married couples filing jointly) may not be taxed at all.

We're Steve Hise and Tricia Garcia, Simi Valley agents. Here's how it works, straight from the FTB's own publications.

1. Why moving away doesn't take the sale out of California's reach

California taxes people based on residency:

• Residents pay tax on income from all sources, anywhere in the world.
• Nonresidents pay tax only on income from California sources.
• Part-year residents (people who moved in or out during the year) pay tax on all income received while they were residents, plus California-source income received while they were nonresidents.

The FTB's list of California-source income includes "the sale or transfer of real California property" and rent from California real property. Publication 1100 says California taxes real property based on where it's located.

So the gain on a Simi Valley house is California-source income whether you sell before you move or two years after. Moving changes which return you file and how the tax is figured, not whether California taxes the gain.

2. The home-sale exclusion still applies in California

On its sale-of-home page, the FTB says California conforms to the IRS rules. You may exclude gain on your main home if, during the five years before the sale, you had at least two years of ownership and two years of use as your primary residence. Ownership and use can happen at different times.

• Single filers: up to $250,000 of gain may be excluded. Any gain over that is taxable.
• Married or RDP couples filing jointly: up to $500,000, if either spouse meets the ownership test, both meet the use test, and neither excluded gain on another home in the last two years.

Because the test looks back five years from the sale date, you don't have to live in the house the day it sells. If you sell before your time living there drops below 24 months in that window, you may still qualify. IRS Publication 523 also covers partial exclusions, for example after a job move of at least 50 miles. Your CPA can check your dates.

3. Sell before you move, or after? How the return changes

Nonresidents and part-year residents with a filing requirement file Form 540NR, the California Nonresident or Part-Year Resident Income Tax Return. Your timing decides where the gain lands:

• Sell, then move later that year: the sale falls in your resident period on a part-year return.
• Move, then sell: you're a nonresident at closing, but the gain is still California-source income.
• Sell in a later year: you'd file a nonresident 540NR for that year, reporting the California gain.

The FTB's 2025 Schedule D (540NR) instructions say nonresidents and part-year residents first report gains and losses as if they were full-year residents, then use a worksheet to figure the California portion.

4. How California figures the tax for part-year residents and nonresidents

Per FTB Publication 1100, you figure the tax on all your income as if you'd been a California resident, turn that into an effective tax rate, and then apply that rate to your California taxable income.

In plain terms: income from your new state can raise the rate on your California gain, even though California isn't taxing that income directly. Run the numbers with a CPA before you pick a closing date.

If you pay tax to both California and your new state on the same income, the FTB says you may be entitled to an Other State Tax Credit.

5. Who counts as a resident? The FTB's "closest connections" test

Your tax move date isn't always the day the truck leaves. FTB Publication 1031 says you're a resident where you have your closest connections, and the strength of your ties matters more than the number. No one factor decides it. The FTB's list includes time spent in California versus elsewhere, your principal residence, your driver's license and vehicle registration, voter registration, bank accounts, your doctors and accountants, and where your real property is.

The publication also presumes you're a California resident for any year you spend more than nine months here. An unsold Simi Valley house doesn't make you a resident by itself, but it is one of the ties on the list.

6. Rentals, installment sales and 1031 exchanges

If you rent the house out after you move: the rent is California-source income, so a 540NR may be needed each year. It also changes escrow: the Form 593 "last used as your principal residence" exemption doesn't apply if the home's last use was as a rental. Our Form 593 guide covers the 3 1/3% withholding and the exemptions.

If you carry a note (installment sale): Publication 1100 says the capital gain in installment payments from California real property stays taxable by California after you move. The interest is sourced to where you live when you receive it.

If you do a 1031 exchange (investment or business property, not your main home): if you exchange a California property for one in another state, the FTB says California can tax the deferred California gain later, when you sell the replacement in a taxable sale.

7. A simple plan before you list

1. Write down your purchase date, move-in and move-out dates, and any time the home was rented.
2. Gather improvement records, which may reduce your gain (Publication 523 explains basis).
3. Pick target move and closing dates, and have a CPA compare "sell first" and "move first."
4. Get a realistic sale price for your CPA to work with. Start with What's My Simi Valley Home Worth?
5. Headed to Nevada or Arizona? See moving from Simi Valley to Las Vegas or to Phoenix.

For timing your sale with a purchase out of state, read our guide to leaving California and selling your Simi Valley home.

Frequently asked questions

Do I pay California tax if I sell my California house after moving to another state?
Possibly. The FTB treats the sale of California real property as California-source income, so it's taxable by California even if you're a nonresident. If the home still qualifies for the home-sale exclusion, some or all of the gain may be excluded.

Does California allow the $250,000 / $500,000 home-sale exclusion?
Yes. The FTB says California conforms to the IRS rules: generally two years of ownership and two years of use as your main home in the five years before the sale, up to $250,000 for single filers and $500,000 for qualifying married couples filing jointly.

What form do I file if I moved out of California during the year?
Part-year residents and nonresidents with a filing requirement file Form 540NR, the California Nonresident or Part-Year Resident Income Tax Return.

Can my new state tax the same sale?
It depends on the state. If you pay tax to both California and another state on the same income, the FTB says you may be entitled to an Other State Tax Credit. A CPA can tell you how it works for your two states.

Selling in Simi Valley and moving out of state?

We have about 20 years of combined experience and have helped hundreds of families sell and move. We'll time your listing and closing around your CPA's advice. We plan both moves together so you're not stuck in between. Start here to schedule a call, or call or text 805-424-6226.

Sources

• Franchise Tax Board, Part-year resident and nonresident (viewed October 28, 2026).
• FTB Publication 1100, Taxation of Nonresidents and Individuals Who Change Residency (revised 10/2024; viewed October 28, 2026).
• FTB Publication 1031 (2025), Guidelines for Determining Resident Status (viewed October 28, 2026).
• Franchise Tax Board, Income from the sale of your home (viewed October 28, 2026).
• FTB, 2025 Instructions for California Schedule D (540NR) (viewed October 28, 2026).
• FTB, 2026 Instructions for Form 593 (viewed October 28, 2026).
• IRS Publication 523 (2025), Selling Your Home.

Steve Hise and Tricia Garcia, Real Estate Toolbox at eXp Realty
Steve Hise CA DRE #01702055 | Tricia Garcia CA DRE #02032007

This article is general information, not legal or tax advice. Tax rules change, and how they apply depends on your dates, your new state and your full tax picture. Talk with a CPA or tax attorney before you choose your sale and move dates.