selling a second home

[Henry39]

Hi.  I own a second home in another state.  I haven't lived in the home or the state for over 10 years.  When I sell the home, what taxes do I have to pay? Federal or state or both? Do I pay the state tax on the gain in the state I currently live or in the state where the home is?

[OmM1]

Hello Henry39

Any capital gains you have from the sale of your second home are taxable by both the Federal and State.

Since the house is located in a different state than your residence state, the state where your second home is located will require you to pay taxes on the capital gains made from that home sale. You will be required to file a non-resident tax return for that state and pay your taxes. TurboTax will help you do this easily. While filing your state taxes, you should prepare your non-resident tax return first.

Your residence state taxes you on your total income, no matter which state or country you made the money  but will give your a credit for taxes paid to the other state where you had your income from. Again TurboTax will help you figure your tax credit for taxes paid to other state. As a general rule on the sale of your second home you will end up paying at higher of your residence or non residence state tax rates.

Hope this answers your question, if not please feel free to update your question.

Thanks again,