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richard7180
Returning Member

Sale of second home

We are residents of Florida and had a vacation home in Massachusetts.  We have not filed a state income tax return in Massachusetts in over 15 years, but we will owe them a capital gain tax of around $10,000.  Do we need to file a return for 2021 or is there a just a form to send them and when does it need to get done.  We also will owe the IRS around $30,000.  Do we need to add this to our next quarterly payment in September or can we wait till we file our 2021 return in April?

7 Replies
Loretta P
Employee Tax Expert

Sale of second home

Hello Richard,

 

If you are expecting to sell the home which will result in a capital gain, you should make the estimated tax payments to cover the gain. 

 

When you sell the home in MA you will need to file a return to report the sale.  

 

Here are some links that may assist you.

 

https://turbotax.intuit.com/tax-tips/state-taxes/multiple-states-figuring-whats-owed-when-you-live-a...

 

https://turbotax.intuit.com/tax-tips/home-ownership/tax-law-for-selling-real-estate/L9PmDNkK5

 

https://turbotax.intuit.com/tax-tips/home-ownership/tax-aspects-of-home-ownership-selling-a-home/L6t...

 

 

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richard7180
Returning Member

Sale of second home

The home is already sold.  Is it proper to add the amount to my September quarterly? When do I need to pay Massachusetts?  Is it ok to wait till I do my returns in April.  Does Turbo Tax support a non resident Massachusetts return?

Loretta P
Employee Tax Expert

Sale of second home

You can add the payment to your September estimate or split it between the September and January 2021 estimated payments.  

 

Yes TurboTax will allow you to file a non-resident return for MA.

 

You can wait until you file your return in April 2022; however, if you do not make the estimated payments you may incur an underpayment penalty when you file your return. 

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richard7180
Returning Member

Sale of second home

Is there an underpayment penalty if we didn't Pay Massachusetts anything in the prior years?

Loretta P
Employee Tax Expert

Sale of second home

If this was just a second home and not rental property, then there was no requirement to file a MA return.  If this was rental property, you would have to go back and file returns in MA for the years it was a rental. 

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richard7180
Returning Member

Sale of second home

My question wasn't answered.  Let me be specific.  As I understand it in Massachusetts there is no underpayment  penalty if I paid 110% of last years tax.  Since that amount is 0 can I wait till I do the 2021 tax in April to pay Massachusetts?

Loretta P
Employee Tax Expert

Sale of second home

As I said in an earlier post you can wait to pay the Massachusetts tax owed when you file the return; however, it will depend on how Massachusetts whether or not they will charge interest or penalty for not making estimates.  Based on the information on page 18 of the instructions for 2020 Form 1,  https://www.mass.gov/doc/2020-form-1-instructions/download, you would not qualify for that exception to making estimated payments. 

 

Addition for underpayment of estimated tax.  You will generally be subject to this addition to tax
if you did not have withholding and/or estimated payments equal to 80% of the total tax liability required to be paid and your 2020 tax due after credits and withholding is greater than $400. 
The 80% requirement is reduced to 66.67% for individuals who receive two-thirds of their income from fishing or farming. If you failed to meet these requirements, you must complete and enclose Massachusetts Form M-2210 to calculate the amount you must add to line 51. You do not have to complete Form M-2210 if the balance due with your return is $400 or less.


You may not be subject to an underpayment penalty if you qualify for one of the following exceptions:
◗ You are a qualified farmer or fisherman and are paying the full amount of the tax due on or before
March 1, 2021;
◗ You were a Massachusetts resident and were not liable for 2019 taxes (where the taxable year
was 12 months); or
◗ The sum of your estimated payments and withholding equals or exceeds your 2019 tax (where
the taxable year was 12 months and a return was filed).


If you qualify for one of these exceptions, fill in the Exception oval under line 51 on Form 1 and
enclose Form M-2210 indicating which of the exceptions applies to your circumstances.
A limited number of taxpayers may also qualify for a waiver of the underpayment penalty for one or
more installments if:
◗ The underpayment was because of casualty or disaster; or
◗ During 2019 or 2020 you retired after reaching age 62 or became disabled and the underpayment was due to reasonable cause and not willful neglect. If you think you qualify for one of these waivers, go to mass.gov/dor and use DOR’s online application for abatement return or enclose Form M-2210 and an explanatory statement with your return and fill in the Exception oval under line 51.


If your waiver is not for all four installments, complete Form M-2210 to calculate the underpayment
penalty for the installments which are not covered by the waiver. Form M-2210 is available by visiting mass.gov/dor.

 

Understanding penalties and interest assessed by DOR: 

https://www.mass.gov/info-details/understanding-penalties-and-interest-assessed-by-dor

 

Here is a link to a calculator on the MA website to help estimate any potential penalty or interest.  https://mtc.dor.state.ma.us/mtc/_/

 

 

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