Taxes when you sell

Most sellers deal with three things: transfer tax at closing, capital gains tax on the profit, and California's withholding rule. Here is how each one works.

Transfer tax

Both San Mateo and Santa Clara counties charge $1.10 per $1,000 of the sale price. Some cities add their own, including San Jose, Mountain View, Palo Alto, and San Mateo. Ask Sean for an estimate of what you would net after transfer tax and other costs.

Ask Sean for a net proceeds estimate

Capital gains on your home

• If you owned and lived in the home for at least two of the last five years, federal law lets you exclude up to $250,000 of profit, or $500,000 for a married couple filing jointly.
• Profit above that is taxed as a capital gain. California taxes it as ordinary income.
• The exclusion has not changed since 1997. Bills in Congress would raise or remove it, but none has passed as of the date on this page.
• Your cost basis includes the price you paid plus the cost of improvements. Keep receipts for remodels and additions.

California withholding

• Escrow withholds 3 1/3% of the sale price for the Franchise Tax Board unless you qualify for an exemption.
• Common exemptions include selling your primary residence and selling for $100,000 or less.
• You certify an exemption on Form 593 through escrow. Withheld money counts toward your state tax when you file.

Read the FIRPTA guide

Sources: IRS Publication 523: Selling Your Home, Franchise Tax Board: Real estate withholding.

General information as of October 21, 2026, not legal or tax advice. Rules change and local ordinances differ. Confirm the details for your property with the agency named above, an attorney, or a tax advisor.