Wife is FL resident, mlitry stationed in CA. I'm C...
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Level 2

Wife is FL resident, mlitry stationed in CA. I'm CA resident. Sold rental in FL. Do we pay capital gain tax if filing jointly? If file separate does she not pay c.g. tax?

 
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Wife is FL resident, mlitry stationed in CA. I'm CA resident. Sold rental in FL. Do we pay capital gain tax if filing jointly? If file separate does she not pay c.g. tax?

On the CA return, you will want to only claim your half of the gain. Your wife's share of the gain is not taxable to CA. Here are the steps:

  1. Be sure to mark that your wife is a FL resident and had income from FL back in the personal information section.
  2. When you enter CA, it will ask about your state residency and station, then the program will realize that you are filing a form 540NR for non-residents and part year, which is what you need.
  3. Select continue
  4. Answer the residency, days there questions until you get to the income section.
  5. Adjust the income from the sale to only reflect your half.

 

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Level 2

Wife is FL resident, mlitry stationed in CA. I'm CA resident. Sold rental in FL. Do we pay capital gain tax if filing jointly? If file separate does she not pay c.g. tax?

Ok, that makes sense for the CA return. Would you suggest we file separately in terms of how much return we would get/owe, or do you think it would probably end up being the same in the end? We are married but living separate so we kind of have separate banking accounts even though we are still legally married. So maybe it would be better to file separately so she wouldn't get hit with the CA tax on the Florida house sale?

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Expert Alumni

Wife is FL resident, mlitry stationed in CA. I'm CA resident. Sold rental in FL. Do we pay capital gain tax if filing jointly? If file separate does she not pay c.g. tax?

You can file joint or separate. She will not have to pay CA tax on the gain either way. When going through the CA, her amount should be allocated to her state, not CA. If you are filing the federal as joint, it would be easier for the state to be filed joint as well.

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