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Level 2

Sale of unimproved land

I inherited land from my father in 2001.  It's value at the time was $1,800.  I kept records, and the property, until 2019, when I sold it for $17,400.  The property is in Virginia and I am a New Mexico resident. The settlement was in Virginia.  Do I have to pay state taxes on the sale (I have already computed the net gain) in both states?

 

If I do have to pay Virginia as well as New Mexico taxes, can I add the cost of downloading an additional state into the net gain equation?

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Level 2

Sale of unimproved land

Just to be clear.  As a New Mexico resident, I add the investment income in my federal taxes under the investment header, and New Mexico will get their taxes when I import my federal information into the state return.

 

As a Virginia non-resident, Virginia can only tax the investment itself; it can't tax my income earned in New Mexico.

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Expert Alumni

Sale of unimproved land

Yes, you must pay tax in both states. The cost of a tax program is not an expense of sale.

 

The Virginia taxable income of a nonresident individual, partner,shareholder or beneficiary is ... business income and loss, capital gains or losses (subject to the 60% long-term capital. VA non-resident

 

Fortunately, NM gives a credit for taxes paid to other states.

 

Does New Mexico offer a credit for income tax paid to another state?

Yes, but only for New Mexico state residents. The credit is based on the tax the other state imposes on the portion of gross income that is also included in New Mexico gross income. The credit may not exceed the New Mexico income tax liability, nor can it be more than Q.5% of the income taxable in the other state. NM Credit

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Level 2

Sale of unimproved land

Just to be clear.  As a New Mexico resident, I add the investment income in my federal taxes under the investment header, and New Mexico will get their taxes when I import my federal information into the state return.

 

As a Virginia non-resident, Virginia can only tax the investment itself; it can't tax my income earned in New Mexico.

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Expert Alumni

Sale of unimproved land

You are correct on both counts.

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Level 2

Sale of unimproved land

Thank you very much for your help!

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New Member

Sale of unimproved land

During 2019 we sold a piece of unimproved property we had for many years.  We live in Missouri and the property was in Florida.  
Where do we enter this sale on our tax forms?  Will we pay taxes in florida and Missouri for capital gains?  We received a 1099-S form at the closing of the sale.

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Expert Alumni

Sale of unimproved land

The sale of undeveloped land is considered an investment, and is treated similar to a stock or Mutual Fund. 

To correct the cost basis on stocks from a 1099-B

  1. Start at Investment income
  2. Select Stocks, Mutual Funds ....
  3. NO you did not get a 1099-B
  4. Select Land and continue through the questions.

Normally you will pay tax in the state that you earned money in, and you home state.  However, you would get credit for the state taxes paid in the state that you live in.

Since Florida does not have an income tax you will only have to include it in Missouri.

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