California conforms to federal Section 1031, so a properly structured like-kind exchange defers both your federal and California capital-gains tax. California generally taxes capital gains as ordinary income at rates up to 13.3%. California also enforces a clawback rule (see below). California has the highest state capital-gains rate in the country.
California is a clawback state. If you exchange California property into a replacement property in another state, California preserves its right to tax the originally-deferred gain — and typically requires you to file an annual report tracking that gain until you finally recognize it. Plan for this before exchanging out of state.
Yes. California conforms to federal Section 1031, so a properly structured like-kind exchange defers both your federal and California capital-gains tax. You still must use a Qualified Intermediary, identify replacement property within 45 days, and close within 180 days.
California taxes capital gains as ordinary income, with a top marginal rate of about 13.3%. A 1031 exchange defers this state tax along with the federal tax.
Yes. California is a clawback state — if you exchange California property into an out-of-state replacement, California preserves its right to tax the originally-deferred gain and generally requires annual reporting until you finally recognize it.
California withholds 3.33% of the sales price on real-estate sales (with exemptions); deferred CA gain on out-of-state replacements is tracked annually on FTB Form 3840.
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Disclaimer: This page is general education, not tax or legal advice, and reflects commonly-cited 2025 rules. Confirm current rates and requirements with a qualified tax advisor and a Qualified Intermediary before acting.