Selling a rental property in AZ but being a resident of OR

Forum|Forum|2 years ago
June 26, 2023
1 reply
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I am considering selling my rental property in AZ, but I currently reside in OR. Oregon has a 10% state capital gains tax, but Arizona does not have one at all. If I sell that property, will I have to pay state (OR) and federal taxes on the gains? Or just federal because the property is in AZ?

Not A Product Question

Critter-3

The sale will be reported on the fed & OR returns as well as AZ. In fact you should have filed an AZ return for each and every year you had a rental in AZ. If you have not then seek local professional assistance to get this situation corrected.

TomD8

Employee

"...Oregon has a 10% state capital gains tax, but Arizona does not have one at all..."

Not exactly true. AZ does not have a separate tax rate for capital gains. Instead, it taxes capital gains at ordinary income tax rates. But it definitely does tax capital gains.

So, as @Critter-3 stated, you must report your capital gain to both states. It is taxable by AZ because that is where the property is located. And it is taxable by OR because your resident state can tax all your income. You'll be able to claim a credit on your OR return for the taxes paid to AZ, so you won't be double-taxed.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.