Please read this first
No attorney or CPA has reviewed this guide. It is general information, and I can't give legal, tax, lending or financial advice. Ask your own attorney and CPA before you act on anything here.
Start with the problem
I ask one thing first. What problem is this move meant to solve? Write the answer in one sentence, then ask if a move is the only fix. Sometimes the best move is no move at all.
| Path | Numbers to run |
|---|---|
| Sell | Price, less loan payoff, selling costs, transfer tax and income tax |
| Hold: keep it and move out | Loan, property tax, insurance, HOA dues and upkeep, less any rent |
| Stay: keep living there | The same costs, plus any fix |
If you are moving up, the Buying page covers which comes first.
What you would walk away with
Your gain is generally the sale price, less selling costs and your adjusted basis. Your basis is generally what you paid plus improvements, less any depreciation. Find your purchase papers and your records of past work now.
The federal home sale exclusion can leave some or all of a gain out of tax if you meet its ownership and use tests. If you have owned for decades, your gain can be more than the exclusion covers, so ask your CPA to run the numbers.
California can hold back part of the sale price at closing as a prepayment of your income tax. An exemption may fit your sale. Ask your CPA, and talk with your escrow officer well before closing.
Selling now and leaving a home to heirs can mean different tax bills, so ask your CPA to compare them.
What it costs to hold
Assessed value is a tax figure, and it can sit well below market value if you bought years ago. Prop 13 generally limits how fast that value can grow. Compare your bill today with the bill on your next home, counting special assessments and direct charges.
Near the water, holding can bring costs a tax bill may not show, such as seawall work and flood repairs. If your home is in Newport Harbor, read what to check if you are keeping the home. For other parts of the coast, see the area guides.
If you rent it
Renting can change how a later sale is taxed, including the exclusion and depreciation, the yearly deduction for wear on a rental. Talk to your CPA before you move out and before you list. If it is already a rental, a like-kind exchange, also called a 1031 exchange, may be worth asking about.
Prop 19
Some homeowners may qualify by age, disability or a disaster. Prop 19 can let them carry their property tax base, the starting figure for the tax, to a replacement main home. It also limits what a child can keep of a parent's tax base. The timing, value and filing tests are strict, so start with the state's Prop 19 page, then ask your county assessor, CPA or attorney.
Homes held in a trust
A home held in a trust can add steps to a sale, such as who can sign. If the person who set up the trust has died, withholding and disclosure can change, so ask your attorney and CPA well before closing.
Questions for your CPA or attorney
- What is my adjusted basis?
- Do I meet the ownership and use tests? Did I have any nonqualified use?
- If I'm married, have we both lived there long enough?
- If my spouse has died, is there a deadline that changes my exclusion limit? How was title held, and what basis applies?
- What would state and federal tax be, counting the net investment income tax and past depreciation?
- Does California withholding apply to my sale, and can I claim an exemption? What if it is a second home?
- Does my replacement meet the Prop 19 timing and value tests?
Then go back to the problem you wrote down.
Written in November 2026. Rules change, so confirm anything important with the official source.
