Legal Question in Real Estate Law in California

Taxation on your principal residence has had nothing to do with what you do with the proceeds for a long time now. There used to be a roll-over deferral, but that long ago was replaced with a blanket flat rate exemption. If you are single, or married filing separately, you get the first $250,000 in capital gains tax-free. If married, filing jointly, you get the first $500,000 tax free. Above those caps, you pay capital gains taxes whether you put the money into a new house or not.