All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 1
Registered: ‎11-27-2017

Real estate taxes on sold home

hi, 

 

I recently moved from California to New Jersey, for a job transfer within the same company.   For the year, I lived in CA from Jan to July-2nd, and moved to New Jersey on July 3rd till now.   I bought a house in New Jersey in April-2017 in preparation for the move; and sold the California house in Sep-2017.

 

I do have a net $30K of Long Term capital gain (from the house sales) after taking into account of $250K benefit.    Since I am not a resident of California when the house is finally sold in Sep-2017,  which state do I owe the long term capital gain tax ?    California or New Jersey ? hopefully, not both.    other alternative ?

 

thank you,  david

 

PS: my company, headquarter in Dallas, had ceased CA state tax payment and started NJ State tax payment on payroll in July, and maintain separate record of CA and NJ state taxes.

Tax Pro
Posts: 5,780
Registered: ‎02-23-2016

Re: Real estate taxes on sold home

Hi david2005,

 

 

Welcome to the H&R Block community.

 

The sale of your home in California is California source income, so it must be reported on a California tax return.  Since you were not a resident of California at the time of the sale this is non-resident income.

 

Since you were a resident of New Jersey at the time of the sale you will also have to report the income on your New Jersey tax return.  All income from all sources derived while a resident of a given state must be reported to your resident state.

 

The good news here is that you can take a credit on your New Jersey tax return for the tax paid to your non-resident state.  The credit will cover most or all of the tax imposed by California depending on what the tax rate for each of the two states is.  The credit is normally figured based on the tax rate in your resident state.

 

If you didn't subtract your selling expenses from the sale price or take all of the improvements (if any) that you made to the home over the course of your ownership into account when figuring your basis your gain may not be as much you calculated.  An improvement is anything that's a new addition to the home, that adds value to the home, or that extends the home's life.  Examples include a new roof, a remodeled bathroom, and a new driveway.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)