In which state will I report capital gains from sale of rental property in another state - the state I live in, or the state the property was in?

Forum|Forum|6 years ago
June 4, 2019
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mulvj

Both. Gain on the sale of real property is generally taxed in the state the property is located. Further, your resident state will generally tax all of your income, but will allow a credit for the tax paid to the other state. The credit is generally limited to your resident state tax rate. Say, for example, your resident state tax rate is 5 percent, but you paid 6 percent in the state where the property was located. Your resident state would allow a credit at the 5 percent rate, not 6.

ACRP

Can I offset capital gains in the year of sale with losses in the year of sale? What about losses from previous years - can those be carried over?

Rick19744

Employee

Agree with @mulvj , however, there are some instances where you have what is called reverse credit states.

You will need to look into this for the two states you are dealing with since those facts were not provided.

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

asaullo

I having an awful problem I sold property in SC and live in NC

Proceed are going into Nc Does anywone know how to fix it

RobertB4444

You need to file two returns and you need to do it in a specific order to get the computer to calculate it correctly.

First, delete all the state returns that you have created so far. You have to start over.

Then, you're going to create a state return for SC. You will tell it you are a non-resident. Go through all of the steps and tell the program that you sold the property in South Carolina but all of the rest of your income is not South Carolina income. South Carolina will tax you on the property sale and you'll owe them some money.

Last, you'll create your resident return for North Carolina. You will enter everything in and the system will enter in a credit for taxes paid to other states. North Carolina will also tax the home sale. But it will deduct the taxes paid to South Carolina so that you don't pay the same taxes twice.

@asaullo

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