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Capital Gain on Estate - Which State - ME, NC or both?

My stepfather's estate was just...
My stepfather's estate was just closed out which included the sale of a home that was in a real estate trust. We understand that we owe Federal capital gain on the house. The house is in Maine. Do we pay capital gain taxes in Maine? We live in North Carolina.

Estate taxes were already paid.  This capital gain is the difference between the home sale price and the value put on the home by the State of Maine for valuation of the estate.
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Answered in 21 minutes by:
2/20/2012
Lev
Lev, Tax Advisor
Category: Tax
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Hi and welcome to Just Answer!

 

Because the property is located in Maine - the gain is considered an income from Maine sources - and as such is taxable for that state. You will need to file nonresident tax return for Maine - and will be taxable only on that income.

If that income is passed to you - it will also be taxable on your North Carolina state income tax return - because you are a resident of North Carolina.

However - you will be able to claim a credit for taxes paid to other states on your North Carolina resident tax return - that will effectively eliminate double taxation.

 

Let me know if you need any clarification of help with other tax related issues.

 

Lev
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