Can I be taxed for capital gains in DC for property sold in New York as a DC resident?

[rjs · Accepted solution]

Yes. Since you live in DC, all of your income is subject to DC tax, no matter where the income is from. If you sold property in New York you have to file a NY nonresident tax return in addition to your DC resident tax return. You will pay NY tax on the gain from the sale of the property. On your DC tax return you should get a credit for part or all of the tax that you pay to NY.

[teilersc]

Thanks! That helps clarify, however it does not appear that I’m receiving the credit on the DC return. Would you happen to know how I would update my tax return to obtain such credit? 

[BillM223]

First, you will want to do the nonresident state first, so do NY first. This will calculate the NT tax first.

Then do your DC return as a resident. The taxes paid to other state will appear as "Out of State tax credit", please see page 14 of the DC Booklet.

Note that the instructions list this as a nonrefundable credit, which means that the credit will be applied to your assessed tax but no more. If some cases, taxpayers may not see this credit, because either they did not have much tax assessed in the resident state or other credits gobbled up the assessed tax or whatever.

But try doing the states in the order I suggested and see how it works out.