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JLNY
New Member

Estimated taxes based on capital gains from real estate sale from non-resident state

In 2019 I sold property (that met the 2 out of 5 year requirement) in california in Nov 2019. I was NYC resident for the whole year of 2019. Should I pay estimated taxes to for the capital gains to one or both states ?

6 Replies
JotikaT2
Employee Tax Expert

Estimated taxes based on capital gains from real estate sale from non-resident state

It depends.  If this house was your main home for 2 out of the last 5 years, you could potentially exclude the gain up to $500,000 if you are married filing joint, or $250,000 if you are any other filing status.  If you did not reside in the home during this period and it was held for investment purposes, you may need to pay taxes to California as these exclusion amounts would not apply to you. 

 

California taxes at ordinary tax rates and does not have any capital gains tax rates.  You would need to file Form 540NR.  The Franchise Tax Board is currently updating it's tax rates schedule  (California Tax Rates) but I have attached a link to the tax rates for 2018 to help you estimate your tax based upon your specific situation and gain from the sale of the property. 2018 California Tax Rates.

 

As for New York, you will be taxed on the gain on the sale of property if there is any, but New York allows you to claim a credit against your New York tax for any taxes you pay to the other state on the same income.  In order to do this, you should prepare the nonresident California return first in the TurboTax program.  Once you have determined the amount of tax due to California, you will enter this amount into your New York return on Form IT-112-R, New York State Resident Credit.  In order to enter this information in TurboTax, when you are preparing your New York return, you will go to "Taxes Paid to Another State" under the New York credit and taxes section.  When you reach the "Other State" page, you can enter CA, continue to the next page, and then enter the tax paid to California.  This will ensure you receive the credit in New York for the taxes paid in California.

 

 

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Hal_Al
Level 15

Estimated taxes based on capital gains from real estate sale from non-resident state

California conforms to the federal rule on home sale, so it is excluded from both your federal and state return (up to $250K, $500K married).  You have no CA source income and do not need to file a CA return or pay CA estimated taxes (Ref: https://www.ftb.ca.gov/file/personal/income-types/income-from-the-sale-of-your-home.html)

 

New York also conforms, so no NY tax is due either (https://mordfin.com/blog/how-do-i-estimate-capital-gains-taxes-on-real-estate-in-new-york/)

Madoma11
New Member

Estimated taxes based on capital gains from real estate sale from non-resident state

I paid Nonresident Real Property Estimated Income Tax on property I used for personal use in NYS but didn't live there.

I paid it to NYS at the closing when I sold this property on an  IT-2663-V. Do I put it under itemized deductions under real estate taxes paid. I've already included my real estate taxes I paid on my GA personal home on line 5b

of schedule A.

DaveF1006
Employee Tax Expert

Estimated taxes based on capital gains from real estate sale from non-resident state

Actually from trying to understand this from your perspective, i take it to mean that you paid this tax for the income derived from the sale of this property. This is not a real estate tax but an income tax charged to you by the State of NY.  Reporting this as a property tax under itemized deductions is not correct.

 

Since you sold the property in New York, you will need to file a NY-State non-resident return reporting the income from the property. 

  1. first go to the tab in my info asking if you made money in any other states.  You will say yes.  
  2. If you have already reported this sale in the federal return, you will need to allocate this income when you begin to fill out your NY state return so only this income is reflected in your NYS return. 
  3. As you scroll through the allocation questions, you will find the capital gains income reported. This is where you indicate that this is NY based.Next to report the income tax paid for the sale of your property. here is the best way to do this since there is no other way to report.
  4. To report the tax paid.  Go to federal>deduction and credits>see all tax breaks>estimates and other taxes paid>show more
  5. Estimated Tax Payments>start>state estimated tax payments>start>

When you arrive at this screen, select Additional payments at the bottom of the screen>date paid>amount. 

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terryomiller44
New Member

Estimated taxes based on capital gains from real estate sale from non-resident state

i sold a boat slip in one state, but live in another.  to which state do the capital gains go?

Hal_Al
Level 15

Estimated taxes based on capital gains from real estate sale from non-resident state

@terryomiller44  - Both. 

 The general rule is: your report all your income on your home state return, even the income received for the sale out of state property. You file a non-resident state return for the state the property was in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state.

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