If I own property in Massachusetts, but am not a resident of Massachusetts, and I sell that property at a profit, does the Massachusetts capital gains tax apply to my sale?


They call it "Massachusetts source income" and most states use similar language. As a non-resident a capital gain event will trigger a filing requirement if the gain is greater than $8,000 or the prorated personal exemption you are entitled to, whichever is less.

Just out of curiosity I emailed the Massachusetts Department of Revenue to ask:

If one were a non-resident of MA for the year but sold a property located in MA would the capital gain from sale trigger a filing requirement for an MA NR return? Thanks!

And they responded within a day:

Dear Taxpayer,

Thank you for your recent inquiry. Yes, you would be required to file a MA return to report the capital gain.

Thank you for visiting our website,

The Massachusetts Department of Revenue

During off-season, IRS and state tax support are usually very quick to respond and help clarify any questions you may have, granted that was an easy one.

Edit: The logical next question is, are you going to get double taxed? The answer to that question depends on which state you live in, but since you live in New York you will file Form IT-112-R to get credit for the tax paid to Massachusetts.

  • Ok, if I live in New York which also has a capital gains tax, am I getting double taxed? – Five Bagger Dec 18 '18 at 16:28
  • @FiveBagger Edited to answer that question as well, it's a logical follow up but depends on state. – Hart CO Dec 18 '18 at 16:52

In general a state will make a claim on income if it is sourced from that state. When you sell property in state X, then you do have income sourced from that state.

It doesn't matter to state X where you are living at the moment the property is sold, it only knows that you have income sourced from their state.

The rate could still be zero if you meet their rules for exemptions.

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