I sold a condo in South Carolina this year, at a loss.
I am not a resident of South Carolina.
When you are not a resident, as part of the closing you have to fill out a form that estimates the profit and then pay 10% of that as a capital gains tax at the closing, and then file a non-resident tax return to reconcile everything.
Since I sold at a loss, I filled out this form showing $0 profit, and therefore made no payment to the state.
Am I still required to file a state tax return?
Thanks.
I don't know whether it is necessary, but I would consider it a good idea. Think of it as insurance against losing the form or deciding your basis was reported incorrectly. In most states, only filing a tax return starts the statute of limitations.
Similarly, I would report the loss on your Federal tax return (form 8949) and adjust the loss using adjustment code L so it doesn't affect Schedule D.
-- Arthur Rubin, CRTP, AFSP Brea, CA
"... and adjust the loss using adjustment code L so it doesn't affect Schedule D."
Why? We don't know how the condo was used, do we?
No, we don't. But it's fairly safe to assume that it wasn't a rental property because, if it were, the OP would have been filing SC non-resident income tax returns each year and wouldn't need to ask the question about the sale.
Ira Smilovitz, EA
I don't see that at all. He is asking a question after disposing of his S.C. property with a loss, perhaps after having rented it and submitting S.C. nonresident tax returns.
My thoughts: if there is a taxable loss, I would report it in order to preserve the loss carry forward. You never know if you might want to use it someday should your circumstances change. And, I endorse the previous comment regarding starting the statute of limitations/preventing the state from making a mistake.
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