A 1031 exchange can defer gain from California real estate, but moving out of California does not necessarily eliminate California tax on that deferred gain. Learn how Form FTB 3840 works, how California tracks deferred gain through later exchanges, why California and federal basis can differ, and what proposed Regulation Section 17951-7 could change.

Moving out of California does not end California tax exposure on real estate you still own in the state. This guide explains California source gain, Form 593 withholding, former residences converted to rentals, installment sales, Section 1031 exchanges, and what nonresident sellers should review before escrow closes.