Sold rental Property in Illinois while 100% resident in Colorado do I report Capital Gain in Illinois return

[TomD8 · Accepted solution]

You report it in both states.  IL can tax a capital gain from the sale of property located in IL.  CO can tax ALL your income, regardless of where earned.

You'll be able to take a credit on your CO return for taxes paid to IL, so you won't be double-taxed.

In TurboTax, be sure to complete your non-resident IL return BEFORE you do your home state CO return, so that the credit flows properly.

[ha-diane79]

I sold my 2nd home in IL at a loss.  I used step-by-step method, there is only one question related to the sale of the property was: 

Capital Gains Adjustment

    On your federal return, you reported gains from the sale of stock or other property.

    Did you acquire any of that property before August 1, 1969?

 I have a net gain of stock and mutual funds over the loss of selling the 2nd home. How does it know that the sale was in IL and it was 2nd home and the sale was at loss? 

My answer is no because I bought this 2nd house in 2017.  Does that all I have to do, TurboTax will automate transfer all information from federal to IL?

V/r,

Diane

[Mike9241]

what was it used for - a vacation home - used personally?

if so, none of the loss is deductible for either federal or Illinois purposes.

so you need to report the sale but use code L to adjust the loss to come out to ZERO

was it a rental? -  substantially different reporting

[ha-diane79]

This is not a vacation or personal use.  My son occupied the house less than 2 years while studying Pharmacoeconomics PHD at UIC.  The house was left empty for more than one year.

I am seeking for a profit but investment at Chicago is not feasible. It would take me 10 years for the price going up.  Chicago Cook county property tax increase almost double every 3 year. I also have to pay HOA, home insurance and electricity bill too.  I bought the house on March 2017 and sell off on April 26 2022.  

I read an article on the taxact.com:

Second Home Held for Investment
If the second home was held for investment purposes, a loss on the sale would be deductible, so an adjustment would not be necessary. The sale of a second home held for investment can be entered using the steps above.

How would you category about this? Second home or Vacation?

[ha-diane79]

Correction: I sold the house on April 26 2021

[ha-diane79]

I bought a second home in IL but I worked and lived in CA.

The home was bought on April 26 2017 and sold on March 25 2021.  

[ha-diane79]

I bought a second home  in IL, but I worked and lived in CA.

The town house was bought on April 26 2017 and sold on March 25 2021.  I never rent out the house or take any depreciation. There is no mortgage loan, I paid cash.  

During this 4 years period, my son occupied about 3 years to study PHD program at University of Illinois at Chicago (UIC). I let him lived there free. He is an independent person.  I didn't claim him as dependent on  filing my income tax return either.

The house was sold at loss.  I never use the townhouse for vacation or my own personal use. Will I able to file it as selling 2nd home so that I can write off the loss?

[AnnetteB6]

Based on the information you shared, yes, you can enter the sale of your Illinois property as an investment property sale.  Therefore the loss would be deductible.

Use the following TurboTax help article as a guide for entering the sale information:

Where do I enter the sale of a second home, an inherited home, or land on my 2021 taxes?

@ha-diane79