North Carolina Estimated Tax for 2025 1099NRS

[Benjamine]

I am a resident of Georgia and am selling rental property (this week) in North Carolina.  I am required by NC to make estimated tax payments on the sale of the property.  I have no idea how to calculate that amount.  Property was purchased for $118K in 2010 and selling price is $250K.  It was rented continuously through the years and my tenant vacated as of December 31, 2024.  My 2024 taxes are not yet complete as I'm waiting for 1099's from my brokerage firm.   

I have never had a penalty from NC when I file my taxes but the NC1099NRS form requires me to make estimated payments based on my reading.  Last year, I paid $164 to NC for two rental properties so clearly will have a large tax liability. 

"The nonresident may also be liable for payment of estimated income tax on the gain to be recognized. You must pay North Carolina estimated income tax if you expect to owe $1,000 or more and you expect your withholding and tax credits for the current year to be less than 90 percent of the tax on the current year tax return, or 100 percent of the tax on the prior year return. You do not have to pay estimated income tax if you were not required to file a North Carolina return for the previous year."

Any guidance on how to calculate the amount? 

Thanks

[DavidD66]

To estimate the tax you will owe to North Carolina you need to determine (or estimate) the gain on the sale of the rental property.  To do this, you need your adjusted cost basis.  You can get your adjusted cost basis from your depreciation reports.  Assuming that you have been using TurboTax in prior years, you can get the adjusted cost basis from your 2023 tax return. You can also go ahead and start your 2024 returns and print the depreciation reports.  If you are using TurboTax Online, you can print or view your return without filing. See the instructions below.  

Your adjusted cost basis will be what you paid for the property, plus any capitalized improvements you made, less any depreciation you took, or were eligible to take.  If you have not been depreciating the property I recommend you consult with a local tax professional.  If you have been depreciating your property, when you set it up did you allocate the purchase price between the improvements (the house) and the land?  Land is not depreciated. 

If you made no improvements that were capitalized and you have depreciated the full cost of your property for 15 years, you would have about $60,000 of accumulated depreciation. That would give you an adjusted cost basis of $58,000. That would give you a gain of $192,000 ($250,000 - $58,000).  North Carolina's tax rate is 4.25%, so that would result in $8,640 of tax due to North Carolina.

Print or View Without Filing:

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