What Should I Know About Selling My California Home When I Move Overseas?

Selling before you leave usually keeps things simpler. You can sign in person, meet inspectors and handle last repairs. Selling after you leave is possible, yet every signature, question and repair has to work across time zones.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas, helping families plan a move through a life transition. When a family is moving abroad, I start by mapping the sale against the move date, so the two don't collide.

This is general information, not legal or tax advice. A CPA and an attorney familiar with international moves should guide your family's specific situation.

Moving abroad does not end your U.S. tax filing. The IRS says U.S. citizens and resident aliens are subject to tax on worldwide income from all sources. It also says that if you live overseas on the regular due date, you get an automatic 2-month extension to file, while interest still applies to tax not paid by the regular due date.

The home sale exclusion. IRS Publication 523 says you may exclude up to $250,000 of gain from selling your home, or $500,000 for a married couple filing jointly. To qualify, you generally must have owned the home and lived in it as your main home for at least 24 months within the 5 years before the sale. The time does not have to be one continuous block.

If you move abroad first and sell later, watch that 5-year window. Your CPA can tell you how long you have.

California may require part of the sale price to be withheld at closing. The Franchise Tax Board's Form 593 instructions explain that withholding is generally 3 1/3% of the sales price, or an alternative amount based on the gain.

Withholding is not required in some cases, including when the sales price is $100,000 or less or when the seller certifies an exemption on Form 593. One exemption is for a principal residence under federal Section 121, which the instructions describe as generally owning and living in the home as your main home for two of the five years before the sale.

My article on California withholding when you sell explains this in more detail, and my article on California residency and taxes covers state residency.

The IRS says FIRPTA withholding applies when a foreign person sells U.S. real property, generally at 15% of the amount realized. FIRPTA is aimed at foreign sellers. If you are a U.S. citizen moving abroad, ask your CPA to confirm how it applies to you before escrow opens.

If you will be abroad during escrow, plan this early:

• Ask escrow about signing options. Find out how documents can be signed and notarized from where you will live.
• Consider a power of attorney. An attorney can explain whether one makes sense, and escrow and title will need to approve it.
• Plan for wiring. Confirm how your proceeds will be sent, and verify instructions by phone with escrow.

The U.S. Postal Service says identity for a change of address can only be verified in person at Post Office locations in the 50 states and Puerto Rico, and people outside the U.S. cannot verify in person and cannot submit a change of address. Handle your mail before you leave. Tax forms and escrow papers often come by mail, so plan where they will go.

• Property tax base. My article on Prop 13 when leaving California explains what happens to your tax base.
• Your belongings. My article on planning a long-distance move can help with timing.
• Timing the sale and the move. Leave room between closing and your flight for surprises.

If your family is planning a move overseas, I'd love to have a private planning conversation with you about your home, your timing and the steps to handle before you go. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.