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I am a resident of California with a home that is being sold

in NC. It is a...
I am a resident of California with a home that is being sold in NC. It is a personal and private home I have held for 2 years and therefore exempt from capitol gains taxes from the federal taxes up to $250,000.
Will this also apply to NC tax rules or will I owe taxes on any capitol gains and need to file a NC tax.
I know there is a sales tax that is collected at the time of sale.
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Answered in 12 minutes by:
8/2/2012
Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
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Just to make sure you understand the capital gain rule under IRC section 121, you need to have actually lived in the home for two of the last five years (if the two years is not consecutive time, that is okay) that you owned the home in order to qualify for the 250,000 dollar capital gain exclusion.

NC does follow Federal section 121. If you qualify for the exclusion and have no other reason to file a NC return (are a NC part-year resident or have NC source taxable income) you should not need to file a NC income tax return.

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Customer reply replied 5 years ago

It is a second home. although I live, work and rent in California.I have traveled back and forth to the home.


I think that still qualifies for IRc 121. Doesn't it?

As long as the total combined time lived in the NC home over the last five years equals a full two years, the home does qualify for the exclusion under section 121.

If the time is less than two years, you may still qualify for a reduced exclusion if certain extenuating circumstances apply. See this IRS link for more about the reduced exclusion: http://www.irs.gov/publications/p523/ar02.html#en_US_2010_publink1000200747

Let me know if you need additional assistance.
Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
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Experience: Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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