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Do I have to pay capital gains in two states?

March 16, 2005

Subject:  Tax Question
Date:  Mon, 28 Feb 2005
From:  Michael

I'm selling a rental property in Colorado. Do I have to pay capital gains to Colorado and California?


Date:  04 Mar 2005

Hello Michael,

Presumably you're a California resident.

Yes. A sale of real estate is always sourced in the state it is located in. As a California resident, you are subject to California income tax on your worldwide income. A tax credit is available on the California income tax return to reduce or avoid double taxation. See California Schedule S and the related instructions. Consider consulting a professional for your tax return preparation for the year of sale.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

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Do I have to pay capital gains in two states?

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