Taxes on real estate sold in UT while resident of California

[M Oates]

If I sold my 2nd home in UT while a resident of CA, would I pay cap gain taxes in both states?

[MaryK4]

You would have to report and pay tax in Utah because that is where the property is located, you would report to California (as your resident state) but get a credit for any taxes paid to Utah so you will not be double taxed.  

[M Oates]

Thanks for your answer.  Since the tax rates are different in CA and UT, will CA tax me at its higher rate, reduced by the credit for UT?

[DianeW777 · Accepted solution]

Yes, that is correct.  Since California (CA) has a higher rate of tax they will give you credit for the full amount of tax paid to Utah. Then you would be responsible for the difference if the UT tax is lower than what CA would charge on the same income. The credit for taxes paid to another state on the same income are summarized below.

The credit for tax paid to another state on the same income will be the lesser of:

1. the tax liability actually charged by the nonresident state, OR
2. the tax liability that would have been charged by your resident state