CA SB601

Increases the capital gains exclusion for sellers of principal residences from $250,000 to $300,000 (or $500,000 to $600,000 for joint filers) when the buyer is a qualified first-time homeowner, effective for taxable years 2021-2025.

Defines "qualified first-time homeowner" as an individual with no ownership interest in a principal residence during the three years preceding the purchase, excluding related parties under federal tax code sections 267, 318, and 707.

Requires sellers to obtain written certification from the buyer, signed under penalty of perjury, confirming first-time homeowner status and including specified information about the buyer, seller, property address, and sales price.

Limits the increased exclusion to single-family residences purchased as the buyer's principal residence for at least two years and eligible for homeowner's exemption under California law.

Provisions only apply if the Legislature authorizes resources in the annual Budget Act for the Franchise Tax Board to oversee and audit returns related to this exclusion.