I live in MA but sold a gift property in CA, how do I file state taxes

Hi!

I was gifted a home, and sold it immediately (so I know I don't qualify for the capital gains exclusion) in CA. I filed for a FTB CA withholding. I live and work in MA. So I know that I have to claim the house sale on my federal taxes, but do I also file a nonresident for CA for the property sale income and report the withheld tax, and then resident for MA and include the property sale income as earned income?

706

Expert Alumni

Mar 18, 2022 7:11:37 AM

Yes

Please do a non-resident California state return first.

Next do your Massachusetts resident return so information can flow from the California return to the Massachusetts return.

The income from the house sale will be claimed on your Massachusetts return as well, but you will also get credit for the tax you pay to California.

Below is a link about the basis of a gift.

Basis of gift

Level 1

Mar 18, 2022 7:35:59 AM

So that means I effectively have to pay tax on the property 3x, once for federal, once for CA, and once for MA?

Level 15

Mar 18, 2022 7:40:16 AM

No. MA will give you a credit, or partial credit, for the tax you pay to CA. There will be little or no double state taxation.

That's why it's important that you do the CA return first, so that TT can calculate the MA credit.

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I live in MA but sold a gift property in CA, how do I file state taxes