Must I pay capital gain on property in another state

by Rob Seltzer, CPA, PFS

I am a resident of California and sold property in Washington State. Am I supposed to pay capital gain on the sale of that property to the State of California?

As a California resident, you are taxable on any income, no matter where you earn it. Therefore, no matter what state you have property in, you would have to report the gain to California. You are fortunate that the State of Washington has no state income tax. If you had sold property in most states, you would have had to file a state return and pay a tax. Then you would also have had to report it to California. California, however, would give you a credit for the tax that you paid to the other state, subject to some limitations. Consider yourself lucky that you had property in Washington and not another state that has individual income taxes.

Rob Seltzer is principal of Robert Seltzer, CPA, PFS, in Beverly Hills. You can reach him at (310) 278-9944(310) 278-9944.

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