What is Capital Gains Tax and how do I know if I have to pay that Tax and how much I will have to pay on that Tax?
I am a renter in one state where I work and where I earn my W-2 income.
I also own a rental home, in another (different) state.
I have owned that home in that other state for 7 years, where I lived 7 years ago (I lived in it for six months and then moved out of state for a new job.)
Ever since I have moved out of the home I own, I have had a renters living in my rental property (on and off) for rouughly the last 6 years.
Thank you so much for allowing me to ask this question.
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Your resident state taxes all of your income. If you have income in another state, you pay tax on the income sourced in the nonresident state. Your resident state will give you credit for taxes paid to a nonresident state.
When you sell a capital asset such as a home, you generate capital gains or losses. When you sell a capital asset, the difference between its cost basis and the selling price results in a capital gain or loss.
Your total capital gains for the year minus your total capital losses results in either a net capital gain or a net capital loss.
A capital loss is a loss on the sale of a capital asset such as a stock, bond, mutual fund or real estate and can typically be used to offset other capital gains or other income.
5 Things to Know About Capital Gains Tax
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