Must I pay capital gain on property in another state (2024)

FAQs

Must I pay capital gain on property in another state? ›

Yes, you should file a Non-Resident State Return in the state where the Rental Property was located, to report the sale. In going through the State Interview, you will be able to indicate what income is to be included on the Non-Resident Return (all capital gains from sale of rental property located there).

As a California resident, you are taxable on any income, no matter where you earn it. Therefore, no matter what state you have property in, you would have to report the gain to California.

States with No Capital Gains Taxes

If you have a large number of assets there might be a benefit to reside in one of the following states. These include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.

If I had to sell my house to relocate for a new job, can I exclude my capital gains? Share: If you meet the conditions for a capital gains tax exemption, you can exclude up to $250,000 of gain on the sale of your main home. Certain joint returns can exclude up to $500,000 of gain.

The majority of states levy capital gains taxes – the only ones that don't are Alaska, Florida, New Hampshire, Nevada, Texas, South Dakota, Wyoming, and Washington. You may face additional capital gains tax consequences in these other states if you sell an investment or asset for a profit prior to moving.

Capital Gains Tax for People Over 65. For individuals over 65, capital gains tax applies at 0% for long-term gains on assets held over a year and 15% for short-term gains under a year. Despite age, the IRS determines tax based on asset sale profits, with no special breaks for those 65 and older.

Most states tax capital gains at the same rate as the federal government. Nine states — Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming — do not tax capital gains.

For the 2024 tax-filing season, the 0% rate on long-term capital gains – any asset held for longer than a year – can be applied to taxable income of $44,625 or less for single filers and $89,250 or less for married couples filing jointly.

Do I have to buy another house to avoid capital gains? ›

You can avoid capital gains tax when you sell your primary residence by buying another house and using the 121 home sale exclusion. In addition, the 1031 like-kind exchange allows investors to defer taxes when they reinvest the proceeds from the sale of an investment property into another investment property.

California – California has one of the highest rates of capital gains tax among the 50 states. The highest rate standing at 13.3%. Colorado – The CGT rate is up to 4.55%. Connecticut – The CGT rate is up to 6.99%.

You might be able to defer capital gains by buying another home. As long as you sell your first investment property and apply your profits to the purchase of a new investment property within 180 days, you can defer taxes. You might have to place your funds in an escrow account to qualify.

When selling a primary residence property, capital gains from the sale can be deducted from the seller's owed taxes if the seller has lived in the property themselves for at least 2 of the previous 5 years leading up to the sale. That is the 2-out-of-5-years rule, in short.

The capital gains exclusion applies to your principal residence, and while you may only have one of those at a time, you may have more than one during your lifetime. There is no longer a one-time exemption—that was the old rule, but it changed in 1997.

When someone sells a capital asset, the difference between the asset's basis, or original cost, and its selling price is the capital gain (if a profit is made) or capital loss. Capital gains are taxable at both the federal level and the state level.

Most states tax capital gains at the same rate as the federal government. Nine states — Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming — do not tax capital gains.