Does TT state (Rhode Island) handle the special NR tax on selling a summer home?

[dwright2020]

We don't have any income in Rhode Island so don't file a state return there. But the state has a special tax on non-residents who sell a property, which we did in 2023. The form we got from the RI tax board wants to know our Federal AGI (like they want to tax us based on that).

Will the TT state return for RI handle that special tax? It should be simply 6% of the gain, nothing else (as I understand it).

[TomD8]

The "special tax" you're referring to is probably RI's capital gains tax.

A capital gain on the sale of real estate located in RI is taxable by RI, whether or not you are a RI resident.

RI taxes capital gains as ordinary income.  The tax rate you will pay varies according to your federal taxable income.

The highest rate is 5.99%.

Bottom line: you must file a non-resident RI tax return, on which you report your capital gain from that home sale.

The capital gain will also be taxable by your state of residence, but you'll be able to claim a credit for the tax paid to RI, so in effect you won't be double-taxed.

TurboTax can handle this common situation.  When doing your returns, be sure to complete the non-resident RI state tax return before you do your home state return, so that the program can calculate and apply the credit.  In the My Info section at the beginning of TT, be sure to indicate that you had income from another state.  This will tell the program to produce the non-resident RI tax return.

Important:  It's possible (but not certain) that RI income taxes were withheld at your closing.  If this is the case, be sure to enter the withheld amount in the Estimates and Other Taxes Paid section of TT.  Check your closing documents.

[dwright2020]

Thanks for the response. I will download the RI state form and see how it goes. (I'm already aware that they took some of the tax at closing.)