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Max Efrein is a journalist who has covered a wide array of topics, including tracking real estate trends, for both traditional newspapers and online media. He also picked up some firsthand home building experience while significantly expanding and renovating his house to accommodate his growing family.
Jedda Fernandez , Associate Refresh Editor Jedda Fernandez Associate Refresh EditorJedda Fernandez is an associate refresh editor for HomeLight's Resource Centers with more than five years of editorial experience in the real estate industry.
Though California is often regarded as a high-tax state, its property and other real estate-related taxes are more middle-of-the-road.
“The perception here is that state income taxes are high, but just on the real estate taxes themselves, they’re pretty comparable to the rest of the country,” says Craig Aird, an associate attorney with Young & Williams LLP who specializes in estate planning, tax, and immigration.
Some of California’s real estate taxes vary throughout the state, as do the expectations on who pays certain portions of a real estate transaction.
Getting a grasp of the various taxes on selling a house in California can feel overwhelming. That’s why we’ve created a detailed list outlining the different taxes you might encounter. Our guide is designed to simplify and clarify the financial aspects of selling your home in California, ensuring you navigate this journey with ease.
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DISCLAIMER: This post is meant for educational purposes only, and is not intended to be construed as financial, tax, or legal advice. HomeLight always encourages you to reach out to an advisor regarding your own situation.
If you profit from the sale of a home in California, then you may owe some capital gains tax unless you qualify for an exclusion, which we’ll address in the chart below.
Capital gains are the profits you make when you sell an appreciable asset, such as a house. For example, if you buy a home for $200,000 and sell it for $500,000, you have a capital gain of $300,000.
In California, capital gains are taxed by both the state and federal governments.
On the state level, California’s Franchise Tax Board (FTB) taxes all capital gains as regular income. Depending on your tax bracket, the tax can be anywhere from 1% to 13.3%.
On the federal level, gains can be considered either short-term or long-term.
The table below shows the long-term capital gains rates for tax year 2024. Single filers can qualify for the 0% long-term capital gains rate with a taxable income of $47,025 or less. Married couples filing jointly can qualify with an income of $94,050 or less.
| Tax rate | Single filers | Married filing jointly | Head of household |
| 20% | $518,901 or more | $583,751 or more | $551,351 or more |
| 15% | $47,026 to $518,900 | $94,051 to $583,750 | $63,001 to $551,350 |
| 0% | $0 to $47,025 | $0 to $94,050 | $0 to $63,000 |
Both the IRS and FTB provide a capital gains tax break for home-sellers who meet certain conditions. The maximum amount of capital gain that can be excluded is $250,000 for single filers or $500,000 for a married couple filing jointly.
To qualify for the full exclusion amount, according to IRS Publication 523, the following criteria must be met:
If you don’t quite check all of these boxes, you may still qualify for a partial exclusion of gain. This can happen if the main reason for your home sale is a change in workplace location, a health issue, or an unforeseeable event. For details on such circumstances, please refer to IRS Publication 523.
A transfer tax is a transaction fee tacked onto the sale of any land or real property.
This amount can only be increased by charter counties or cities — those that have adopted a charter and therefore have supreme authority over municipal affairs. Of California’s 482 cities, 121 have charters.
Here are some examples of what the documentary transfer tax looks like in a few of California’s largest cities:
| Location | Transfer tax rate on a $500,000 home* | Transfer tax paid on a $500,000 home |
| San Diego | 55 cents per $500 | $550 |
| Sacramento | 55 cents per $500 | $550 |
| San Francisco | $3.40 per $500 (More than $250,000 but less than $1,000,000) | $3,400 |
| Los Angeles | $2.25 per $500 | $2,250 |
*The transfer tax rate in some cities is tiered so that the greater the purchase price or market value, the greater the tax.
When transferring a home in California, the seller usually pays the tax, but this can be a point of negotiation during the transaction. If left unpaid by the time the sale goes through escrow, then the payment responsibility automatically falls on the buyer.
Annual property taxes in California have two payment stubs. They can be paid simultaneously or in two installments.
The first installment is due Nov. 1 and becomes delinquent Dec. 10. The second installment is due on Feb. 1 and becomes delinquent April 10.
Once a home is sold, the seller is no longer responsible for its property taxes.
For example, if the fictional Jim and Susie pay the first installment in November and then sell their Sacramento home in December, it is now up to the buyers to cover the second installment due in the spring.
Aird says he experienced a scenario like this firsthand as the buyer of a California home in 2021.
“Part of the closing cost was paying into an escrow for that next property tax payment that was due in a few months,” Aird says. “It was our responsibility as the buyer.”
As the heir, however, you do take on any debts attached to the property, such as an outstanding mortgage.
When selling an inherited home, many of the same considerations apply as they do to selling any California property. Where things differ the most is with capital gains.
Fortunately for heirs, the values of inherited assets are adjusted by what’s called a step-up in basis, Aird says. This means that no matter how much a home has appreciated in value since it was originally purchased, a decedent’s heirs are not responsible for paying the taxes on those historical gains if they choose to sell the home. Rather, the property automatically converts to the current fair market value.
If the heirs choose to immediately sell that property for the assessed fair market value, then there are no gains. However, if they sell the property for more than the fair market value or choose to hold onto the property for a while before selling and its value continues to appreciate during that time, then those are considered taxable gains.
Real estate taxes don’t need to be a surprise or intimidating.
There are some simple steps to take that can help you prepare for what’s to come if you decide to sell a home in California.
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