East County Home Sale Tax Checklist For Sellers

Selling your East County home should not come with tax surprises. You want clear steps, the right forms, and confidence about what will be withheld at closing. This guide gives you a practical checklist tailored to East County San Diego so you can prepare documents, avoid delays, and protect your net proceeds. Let’s dive in.

What affects your home sale taxes

Federal rules at a glance

• The federal home sale exclusion may let you exclude up to $250,000 of gain if single or $500,000 if married filing jointly, as long as you meet the 2‑of‑5‑year ownership and use tests. See worksheets in IRS Publication 523, Selling Your Home.
• Any remaining gain is taxed as short‑term or long‑term. Long‑term gains use tiered rates based on income, and higher earners may also owe the 3.8 percent Net Investment Income Tax. See current brackets in Kiplinger’s capital gains overview.
• If you claimed depreciation for prior rental or business use, part of your gain can be taxed at rates up to 25 percent as unrecaptured Section 1250 gain. Review IRS Form 4797 instructions with your tax advisor.

California rules

• California taxes capital gains as ordinary income. There is no special lower state capital gains rate, so plan for state tax if you have taxable gain. Review the Franchise Tax Board guidance on capital gains and losses.
• California real estate withholding often applies at closing unless you qualify for an exemption or alternative calculation. See FTB Form 593 guidance.

Local transfer taxes and fees

• San Diego County collects a documentary transfer tax when your deed is recorded, typically shown on your closing statement. See the Recorder’s page on recording and transfer taxes.
• Some East County cities add their own city transfer tax. For example, El Cajon has a city documentary transfer tax ordinance. Check local rules or ask escrow to confirm. You can review El Cajon’s municipal code reference for context.

Your East County seller tax checklist

Before you list

• Gather documents that affect your taxable gain: original purchase closing statement, receipts for capital improvements, and records of any rental use and depreciation. See the basis worksheets in IRS Publication 523.
• Confirm if you meet the 2‑of‑5‑year tests for the federal exclusion using the Pub. 523 worksheet or with your tax professional.
• If the property is an investment, discuss a 1031 exchange early. You must use a Qualified Intermediary and follow 45‑day and 180‑day timelines. Learn the basics in this 1031 exchange overview.

As you enter escrow

• Ask escrow for a draft settlement statement so you can preview transfer taxes, title and escrow fees, prorations, and payoffs.
• Complete California Form 593 promptly to claim any exemption or to use the alternative withholding calculation. Provide your TIN to avoid default withholding.
• If you are a foreign seller under FIRPTA, the buyer must generally withhold 15 percent of the amount realized unless you qualify for a reduction. Coordinate early using the IRS guidance on FIRPTA withholding.
• Verify whether a city transfer tax applies for your parcel’s jurisdiction, especially if selling in El Cajon.

At closing

• Review who pays the county and any city documentary transfer tax on your settlement statement. Local custom often assigns the owner’s title policy to sellers, but confirm with escrow.
• If you expect taxable gain, consider federal and state estimated tax planning to avoid underpayment penalties. See the IRS overview on estimated taxes in Publication 17.

After closing

• Keep copies of Form 593 and any withholding confirmations. Withholding is a credit on your California return.
• Watch for San Diego County supplemental property tax bills after the change in ownership. See the county’s supplemental assessment FAQ.
• If you are 55 or older, severely disabled, or a wildfire/disaster victim, review whether you can transfer your base year value to a replacement home under Proposition 19. Start with the BOE’s Prop 19 overview.

Common withholdings at closing

California Form 593 withholding

• Default withholding is generally 3.33 percent of the gross sales price. You may qualify for a full exemption, such as a principal residence that meets the rules, or you can request reduced withholding using the alternative calculation on Form 593.

FIRPTA for foreign sellers

• If the seller is a foreign person, the buyer typically withholds 15 percent of the amount realized. A seller can apply for a withholding certificate before closing to reduce this amount. See the IRS guide to FIRPTA processing.

Costs that reduce your net proceeds

• Real estate commissions, owner’s title insurance premium, escrow fees, county and any city transfer taxes, mortgage and lien payoffs, prorated property taxes and HOA dues, recording fees, and any agreed credits or repairs are typical. These are not income taxes, but they do affect your bottom line. The county outlines key recording and tax items you will see at closing.

Timing tips and deadlines

• California withholding forms and payment are generally due to FTB by the 20th day of the month after closing. Coordinate with escrow to file on time. See the FTB’s withholding page.
• 1031 exchanges have strict 45‑day identification and 180‑day acquisition windows. Set up your Qualified Intermediary before closing.
• Prop 19 base year transfers usually require buying or building your replacement home within two years and filing claim forms with the assessor. Check the BOE guidance.
• Supplemental property tax bills can arrive months after closing. The county explains timing in its supplemental assessment FAQ.

Local notes for East County sellers

• San Diego County charges the documentary transfer tax at recording. Expect it on your closing statement and grant deed. Review county recording details.
• Some cities add a city‑level transfer tax. El Cajon is one example. Ask escrow to verify your parcel’s city jurisdiction and any city tax, and consult the El Cajon code reference if applicable.

Work with a local team

Taxes are personal, and small details can change your outcome. Having a seasoned East County team coordinating escrow paperwork, timing, and city and county nuances helps you avoid last‑minute surprises and keep your sale on track. If you are planning to sell, the Lyle + Grace Team can help you price, prepare, and navigate the process so your net proceeds are protected.

FAQs

What is the federal home sale exclusion for East County sellers?

• You may exclude up to $250,000 of gain if single or $500,000 if married filing jointly when you meet the 2‑of‑5‑year ownership and use tests; see IRS Publication 523.

Does California have a special capital gains rate on my home sale?

• No, California taxes capital gains as ordinary income; review the FTB’s page on capital gains and losses.

Will escrow withhold money from my sale in California?

• Often yes, unless you provide a valid exemption or alternative calculation on Form 593; FIRPTA may also require withholding if the seller is a foreign person.

What is FIRPTA and who handles it at closing?

• FIRPTA is a federal rule that requires buyers to withhold on sales by foreign persons; the IRS outlines the process in its FIRPTA guidance.

Could I face extra property tax bills after selling?

• Yes, supplemental assessments can be issued when ownership changes; see San Diego County’s supplemental assessment FAQ.