Residents and Non-residents - Gains or losses from the sale of real estate have a source where the property is located.  Thus, both residents and non-residents are taxed on the gain from the sale of California real estate and include a loss from sale of California real property on their California return if the loss is otherwise allowed under the usual loss recognition rules.  Gains from real estate sales of property located outside of California are only taxable to California if the taxpayer is a resident of California at the time of the sale. Losses from out-of-state real property sales – if the loss is permitted under the normal loss recognition rules – are allowed to California residents the same as if the property were in California. A California resident selling real property located in another state may be required to file a non-resident return for the other state, depending on the other state’s filing requirements.