Selling Your Former Home After Moving States
The federal exclusion, the former state's nonresident tax on the gain, and withholding at closing
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
After moving to Florida, selling your former home can be largely tax-free federally — the US$250,000 or US$500,000 exclusion applies if you owned and lived in it two of the five years before sale. But real estate gain is sourced to where the property sits, so your former state taxes any taxable gain, often collecting estimated tax at closing.
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Federal
The section 121 exclusion (US$250,000 single, US$500,000 married filing jointly) applies to a main home owned and used two of the five years before sale — so a sale within three years after moving can still qualify. Gain above it is long-term capital gain.
Your former state
| State | Withholding or estimated payment at closing |
|---|---|
| New York | Form IT-2663 — estimated tax on the gain at the top rate (10.9 percent for 2026), paid when the deed is presented for recording |
| New Jersey | GIT/REP — the greater of 2 percent of price or the top rate (10.75 percent) on gain |
| California | 3.33 percent of price, or an elected amount based on gain |
| Massachusetts, Maryland, Georgia, others | Nonresident withholding programs with their own rates and exemptions — Massachusetts withholds only on sales of US$1 million or more (from November 1, 2025) |
Most states follow the federal exclusion, so a qualifying sale may owe little or no state tax — but the withholding may still apply unless an exemption form is filed (for example, the section 121 principal residence exemption on New York's Form TP-584, New Jersey's GIT/REP-3 — available only if all the gain is excluded — or California's Form 593). The excess is recovered on the nonresident return.
Rental before the sale
Renting the former home after moving creates nonresident rental income (the rental guide) but renting it after you move out isn't nonqualified use that shrinks the exclusion, as long as you sell within three years of moving out — though gain equal to depreciation claimed after May 6, 1997 can't be excluded.
Frequently asked questions
Can I still use the home sale exclusion after moving to Florida?
Yes, if you owned and lived in the home two of the five years before the sale.
Does my old state tax the sale?
Yes, on any taxable gain — real estate gain is sourced to where the property is.
Why was tax withheld at closing?
Many states require nonresident sellers to prepay estimated tax at closing.
Can I get the withholding back?
Yes, on the nonresident return for the sale year.
Official sources
The New York State Department of Taxation and Finance explains: “Nonresident individuals, estates, and trusts are required to estimate the personal income tax liability on the gain, if any, from the sale or transfer of certain real property located in New York State.” — New York State Department of Taxation and Finance, Instructions for Form IT-2663, Nonresident Real Property Estimated Income Tax Payment Form, https://www.tax.ny.gov/pdf/current_forms/it/it2663i.pdf
The IRS explains: “If you meet certain conditions, you may exclude the first $250,000 of gain from the sale of your home from your income and avoid paying taxes on it. The exclusion is increased to $500,000 for a married couple filing jointly.” — Internal Revenue Service, Publication 523 (2025), Selling Your Home, https://www.irs.gov/publications/p523
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk handles home sale gain computations, nonresident seller withholding exemptions, and nonresident returns for the sale year. See pricing or book a call.
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U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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