Replies

“...the state imposed a sales tax if you didn’t put the proceeds of your sale back into California real estate.”

Really? We sold our condo and bought our current home in 2001. At least we are within a 10 minute drive to hubby’s work and in a stable area that is not getting hit with foreclosures, yet. But I didn’t know we had the same thing that NJ has, an exit tax to leave the state. At least we aren’t upside down with a 30 year fixed, no funny loan stuff for us. We had been upside down in our condo for years, glad we got out of that. This market would be terrible for condo’s.

The tax is 3%. You can get it back when you file CA state income taxes the following year IF you can prove the proceeds went back into CA real estate. If not, CA keeps the money. It is essentially an exit tax. A big one considering the inflated values of CA real estate. The house I purchased in 1983 for $105,000 closed escrow on Feb 28, 2001 for $242,000. The market value for that house rose to nearly $500,000 a few years ago. Certainly overpriced.

After paying my sales expenses and moving costs, I had $80,000 to put down on my house in Idaho. I sold stock in 2002 to pay off the mortgage. The $117K payoff saved me $180K in interest over the life of the loan. Neither the stock nor an interest bearing account on that principal would have paid as well. I decided a free and clear house was a necessary resource if job alternatives fail to produce the level of income I'm making now. Paying $2080 in annual income tax is affordable for nearly anyone. Especially for a 3900 sq ft house on 1/3 acre.

“...the state imposed a sales tax if you didn’t put the proceeds of your sale back into California real estate.”
...But I didn’t know we had the same thing that NJ has, an exit tax to leave the state.

While the IRS allows you to sell one time w/o a capital gains tax on the appreciated value less purchase price and improvements. Wisconsin goes CA & NJ one better and charges the capital gain if you don't reinvest in the state within six months.

I had a friend from Ohio who lived in Racine and when he retired sold his house there and moved back to Zanesville. The state went after him for the capital gain, he fought it all the way up to the Wisconsin Supreme Court and lost. He finally paid.

Regards,
GtG