May real property gains (e.g. from sale of residency above exclusion amount) be subject to double taxation (taxed by two states)? Or can one avoid this problem?
Several states seem to tax income based on income received while a resident, plus capital gains from "sources within" the state while a nonresident (CA's phraseology), or from "[state] sources" (NY's phraseology). NY is even clearer in saying that this includes income you received while you were a non-resident that came from "property located in New York State".
So it looks like you can get double taxed on gain from sale of real property if you move from one state to another, and the sale is completed after one changes residency. This, because the old state (where the property sits) will tax the gain independent of current residency, and the new state will tax the gain if it is realized when you are a new resident. The only obvious way I see to avoid double taxation of the gain is to complete the sale before residency changes.
Have I missed something here? Thanks.
Mark Freeland snipped-for-privacy@sbcglobal.net