Question

NH Tax, Sold Out of State Rental Property

Forum|Forum|3 years ago
April 3, 2023
2 replies
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I am a NH resident and owned a rental property in another state. I sold this rental property in 2022, resulting in a capital gain from property appreciation and recaptured depreciation. Over the years, I paid taxes on rental income to the state in which the rental property was located, and for tax year 2022 am reporting the sale and paying associated taxes. When calculating 2022 NH taxes, TurboTax prompts me to file a BT Summary for business tax based on the gross proceeds of the sale of the property as reported on the federal tax return. It also calculates an amount of tax due based upon this same information. This is the first time I encountered this with TT and filing with NH. All activity associated with the rental property was conducted outside of NH and there is not a NH business connection aside from my residency. As I work through TT, there seems to be a way to apportion between states for a NH based business that has out of state activity/income. There does not appear to be a way to account for activity solely outside of NH with no activity in NH. I have already tried deleting the state returns, running the other state first and then NH. Same result.

Do I owe tax to NH for the sale of an out of state rental that resulted in a gain? If yes, how should the information be input to accurately apportion the gain?

Thank you

JohnB5677

You may owe a Business Profit Tax (BPT) in NH. You may not have been required to file in the past because you were below the income limitation.

"Any business organization, organized for gain or profit carrying on business activity within the State is subject to this tax. However, organizations with $50,000 or less of gross business income from all their activities are not required to file a return."

Yes, you can apportion out of state activities.

"For taxable periods ending before December 31, 2016, an 8.5% tax is assessed on income from conducting business activity within the State of New Hampshire. For multi-state businesses, income is apportioned, using a weighted sales factor of two and the payroll and property factors. Organizations operating a unitary business must use combined reporting in filing their New Hampshire Business Tax return."

Who do I contact with questions?

Call Taxpayer Services at (603) 230-5920 or write to NH DRA at PO Box 637, Concord, NH 03302-0637.

Please see: Frequently Asked Questions - Business Profits Tax

If this does not completely answer your question, please contact us again and provide some additional details.

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M

MonicaNH

Best to call NH Tax help line 603-230-5920. I have a similar situation. We are also residents of NH and sold rental property that is outside NH. I called the help line and spoke to the audit division. She referenced RSA 77-A:1 - Vll- that provides a definition for NH Business Activity. And explained that even though we are residents of NH, the business activity is outside NH and is not taxable in NH. Additionally it does not need to be reported to NH. She also said if you do file a return for NH that the apportionment schedule would show all business activity is outside the State and no tax would be payable to NH.. But best to call and provide your information to feel comfortable with your filing requirements.