My wife and I are planning to move from Texas to Oregon in the summer of 2025. We currently own a home in Texas, which we intend to sell before relocating in May 2025. My question is: since Oregon has a state income tax, will we be required to pay capital gains tax there? And if so, does the timing of the sale affect the amount of tax we will owe?
Q. Since Oregon has a state income tax, will we be required to pay capital gains tax there?
A. No, since the capital gain will be realized before you actually become an OR resident.
Q. Does the timing of the sale affect the amount of tax we will owe?
A. Yes. Capital gains are taxed by the state you live in, when you sell the investment, even your home.* If you receive the whole sale amount after the move, the entire gain would go on the OR return.
Oregon does conform to the federal home sale exclusion rule. If you qualify for the federal home sale exclusion (of the capital gain), you can also exclude it from the Oregon return.
*Actually, you could be double taxed if you moved from a state with an income tax. If you moved from Ohio (for example) and didn't sell your OH home until after the move, you would have to report the sale on your OH return because you had "OH source" income (the sale of a physical asset located in OH) and on your OR return because you received the income while an OR resident. OR would give you a credit for the tax paid to OH. As you might surmise, this is a common situation.
Q. Since Oregon has a state income tax, will we be required to pay capital gains tax there?
A. No, since the capital gain will be realized before you actually become an OR resident.
Q. Does the timing of the sale affect the amount of tax we will owe?
A. Yes. Capital gains are taxed by the state you live in, when you sell the investment, even your home.* If you receive the whole sale amount after the move, the entire gain would go on the OR return.
Oregon does conform to the federal home sale exclusion rule. If you qualify for the federal home sale exclusion (of the capital gain), you can also exclude it from the Oregon return.
*Actually, you could be double taxed if you moved from a state with an income tax. If you moved from Ohio (for example) and didn't sell your OH home until after the move, you would have to report the sale on your OH return because you had "OH source" income (the sale of a physical asset located in OH) and on your OR return because you received the income while an OR resident. OR would give you a credit for the tax paid to OH. As you might surmise, this is a common situation.