AB 1806 Summary

• Amends Section 17152 of the Revenue and Taxation Code to align California personal income tax law with federal tax treatment of gains from the sale of a principal residence.

• Reduces the two-year ownership period required for the principal residence exclusion by up to 18 months of Peace Corps service during the five-year period before the sale.

• Allows taxpayers prohibited from filing joint returns under state law to satisfy federal requirements if they file a joint return for federal purposes, with total exclusions capped at federal maximums.

• Binds state elections to federal elections under Internal Revenue Code Sections 121(f), 121(d)(9), and related provisions, preventing separate state-only elections.

• Applies federal special rules for surviving spouses' sales under Section 121(b)(4) of the Internal Revenue Code to sales occurring on or after January 1, 2010.