What It Takes to Retire in Boise After Selling a House in California
Selling a California house and buying in Boise looks like a simple trade on paper, but the tax bill follows you across state lines, Medicare premiums can spike two years later, and the equity gap has to stretch across a…
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A California couple getting ready to retire might see their house valued near the statewide median of $899,720, then pull up Boise listings and find that Ada County’s median sales price was $538,000 earlier this year. That gap is one reason cited for the move.
The reality is that plenty of people have already made the move, as IRS data shows 7,907 tax returns moved from California to Idaho in 2022-2023. What follows covers what the sale really clears, how Idaho taxes a retiree, and whether the remaining equity can pay for a full retirement.
What the California Sale Leaves After Taxes
Under the federal home-sale exclusion, up to $250,000 ($500,000 if married and filing jointly) of gain is tax-free, as long as the owners owned and lived in the home for at least 2 of the 5 years before the sale. California follows the same rule, and in California, gain above the cap is taxed as regular income, at rates up to 13.3%. Moving before the sale leaves that tax in place.
Franchise Tax Board guidance says gain on California real estate is taxable by California even if the real estate is sold when you are a nonresident. 24/7 Wall St. has also covered how that exclusion has stayed frozen since 1997, even as home values climbed.
As an example, a couple with a $300,000 cost basis sells for $899,720. That leaves $99,720 of taxable gain at both the federal and state level. The gain also counts toward Medicare’s income-related surcharge, called IRMAA, which is based on income from two years earlier. Joint filers above $218,000 pay an extra $81.20 a month each on Part B.
How Idaho Taxes Retirement Income
Idaho doesn’t tax Social Security benefits; however, Idaho taxes IRA withdrawals and pensions at a flat rate. House Bill 40 cut that rate from 5.695 to 5.3%. Idaho charges its full 6% sales tax on groceries but gives some of it back through a refundable credit. That credit went up to $155 per person a year.
Property tax in Boise is relatively low. The homeowner’s exemption lowers the taxable value of a primary home by the lesser of 50% of assessed value or $125,000. Ada County homeowners pay a median of $2,655 a year, or about 0.52% of home value. Lower-income seniors can also get up to $1,500 off through the Property Tax Reduction program.
A Monthly Budget Built on the Leftover Equity
Say the couple sells at $899,720 and buys at $538,000. That leaves $361,720 before commissions and taxes. Assume that money sits in index funds and a Treasury ladder with a 4% annual draw, a rate often used in 30-year retirement planning (though the case against leaning on it is laid out in a free guide here). That works out to about $1,206 a month. Add the average couple’s Social Security benefit after the 3.6% 2027 raise ($3,355), and monthly income comes to about $4,561.
With the house paid off, the biggest fixed bills are property tax at about $221 a month and two Part B premiums totaling $405.80. That leaves roughly $3,787 for everything else: drug coverage or a Medigap plan, utilities, food, homeowners insurance, car replacement, home repairs, gifts, and a cash reserve. The budget also has to cover the $283 Part B deductible and the $1,736 Part A hospital deductible. Prices are lower overall, too.
The BEA puts Idaho’s price level at 95.494, compared with California’s 110.72. Retiring before Medicare eligibility means marketplace coverage and a lower withdrawal rate until 65. Waiting to claim Social Security increases that $3,208 figure and eases pressure on the portfolio.
Trade-Offs Worth Pricing In Before Listing
Boise prices have risen, with the FHFA price index up 25.68% over five years and 3.65% over the past year. The median Ada County listing price recently hit $659,900, well above the sales median. Winters are colder and drier. Boise may have fewer large academic medical centers than Los Angeles or the Bay Area, and family may be a flight away.
Medicare takes some planning too. Moving out of a Medicare Advantage plan’s service area opens a Special Enrollment Period, which allows a switch to a new plan. Each state sets Medigap rules, and Idaho’s may differ from California’s. Earlier 24/7 Wall St. coverage explains the short window to buy Medigap without health questions after a move.
What Makes the Numbers Work
The budget lines up with income if spending stays near $4,561 a month. That takes average Social Security, a 4% draw on about $361,720, and a paid-off Boise house. Each extra $1,000 a month in spending takes about $300,000 more in savings. One major variable is the tax on gains above the frozen exclusion, since it reduces equity and can raise Medicare premiums two years later. Some couples also spend a week in Boise in January before listing the California house.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
