[QUOTE=BADBLOWN572;2547104]Thats a big one. Per memory, in CA, you have to consider a property your personal residence for 2 years out of the last 5 that you own it to get away from capital gains. If you don't, you will be paying big time!
It is a Federal law. California does not have capital gain tax. It is all ordinary income. The federal capital gain rates are applicable to assets held for more than a year. The 2 out of 5 thing is a Federal law that allows the first 500k of profit (married filing jointly) to be tax free. Also keep in mind, if you buy another and then sell your current one at a later time and claim this exemption, you will have to wait another 2 years beyond that sale to get the same exemption on the new one.