quick question - capital gains on sale

[Lalo2]

I sold a rental property out of the state I live in. I am trying to find a quick answer to a basic tax question to make a quarterly tax payment (and will definitely consult a professional before I file).

The house I sold is in California, the state automatically withheld $10,000 for potential state sales taxes under the "CARE program". I am a long-time Colorado resident. Do I owe capital gains to California, Colorado, or both? Does the CAREs withholding count toward my estimated federal taxes (capital gains and depreciation recapture), or just state taxes?

Can anyone suggest a good, plain language summary of the process?

[Cheddar Stacker]

 I know nothing of the care program. But what I can tell you is CO won't charge you unless CA doesn't. CA will charge you, so this likely won't be taxable in CO. Federal, you will likely owe 25% on depreciation recapture and 15% on capital gains - roughly sale price less cost.

I doubt anything collected by a state would count towards your federal liability. I've never heard of anything like that, but again, I've never heard of the care program.

[Lalo2]

Thanks! that is helpful.

Of course the California cap gains rate is about 3-times higher than Colorado's. ...

[jmusic]

You'll actually need to file both California and Colorado tax forms at the end of the year.  The CA form should only have CA sourced income (your property only).  That should've included all of your rental income in the past as well for the entire duration of renting out the property.  You'll likely get a refund of a portion of the $10k.

On your CO return, since it is your state of residency, you'll include ALL of your income, regardless of source.  You should have a section for "taxes paid to other states," so you're not double-taxed on your property though.

Source:  Former Military Volunteer Income Tax Program Coordinator.



Also, if you're looking for another rental, have you considered doing a 1031 exchange?  It might be too late now, but it might not.