paoniabob
New Member

Do i have to pay capitol gains tax to states and the federal government?

 
Hal_Al
Level 15

Get your taxes done using TurboTax

Simple answer: yes. Your capital gains are just part of your total income that both the feds and the states tax.

"Capital gains tax" is somewhat of a misnomer. There is no capital gains tax that is  separate from income tax. It's just that long term capital gains are taxed a a separate tax rate from the tax rate on ordinary income, on the federal return.  Most states do not have a special, lower, tax rate for capital gains. But, some do. The capital gains rate, on the federal return, can be as low as 0% for lower income people.

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Get your taxes done using TurboTax

Normally, yes, although the Federal rate might be 0%. Some states, though, tax capital gains at ordinary income rates.

Do you have some special situation?

paoniabob
New Member

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Ok, This is the situation that is confusing. I sold my residence in Colorado that i owned for over 30 years. I lived there 50% of the time. Can i claim this as my residence along with my current residence 50/50 with no capitol gains tax.
Hal_Al
Level 15

Get your taxes done using TurboTax

The sale of you primary residence is tax free, on up to $250,000 of capital gains ($500,000 married filing jointly) IF you lived in it, as your primary home for at least 2 of the 5 years prior to sale.
You can only have one primary residence, for purposes of this rule. So, it kinda depends on the details of 50/50 and "I lived there 50% of the time''.