I have a question related to investment property tax deductions and filing taxes. I have a rental property in Colorado that provides income. However, I live in another state. Do I need to file a Colorado return to address investment property tax issues?
Your investment property income and deductions would be Colorado source income and deductions. You must file a nonresident Colorado return if both of these apply:
- You’re required to file a federal return.
- You have both of these even though you’re not a Colorado resident:
- Income from a Colorado source
- A current-year Colorado income tax liability
Each state has its own filing requirements for nonresidents. Check the specific rules of the state in your situation.
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The first step in how to calculate long-term capital gains tax is generally to find the difference between what you paid for your property and how much you sold it for —adjusting for commissions or fees. Depending on your income level, your capital gain will be taxed federally at either 0%, 15% or 20%.