Yes, you are correct. Nevada doesn't have a capital gains tax, and yes, you may still have to pay a capital gains tax on your federal tax return.
What DavidD66 means is that you can't exclude a portion of your proceeds from the sale of your home if you don't meet the requirements. The three tests that you must meet are:
- Ownership - You must have owned your home for at least two of the five years before you sell your home
- Use - You must have used your home as a personal residence for at least two of the five years prior to the date that you sold your home
- Timing - You can't exclude the gain of another principal residence that you sold within two years of the current sale.
If you meet these requirements, you don't have to pay taxes on the first $250,000 (500,000 if you are married and file a joint tax return). If your profit is more than $250,000 ($500,000 if MFJ) then, the excess is reported on Schedule D as a capital gain.
From what you describe, you're not able to exclude any profit because even though you owned your home, you didn't meet the three requirements.
For additional information, refer to the TurboTax article Tax Aspects of Home Ownership: Selling a Home and the IRS article Topic no. 701, Sale of your home.
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