Question

We bought our primary residence home in Colorado in 2008 & sold it in 2023. We do not owe federal capital gains tax, but do we still owe Colorado tax?

Forum|Forum|2 years ago
February 26, 2024
1 reply
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According to the rules for the Taxpayer Relief Act of 1997, we meet all the guidelines to be exempt from federal tax. However, it's not clear to me if we're still liable for capital gains tax in Colorado.
The house did appreciate during this time.
The house was our primary residence since we put it on sale in Oct 2022.
We closed on the house in Feb 2023.
We are a married couple, filing jointly, that bought another primary residence in another state in Oct 2022.

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D

DavidD66

No. You won't owe Colorado tax either. While Colorado does have a capital gain tax on the sale of a residence, they have the same exclusion as federal tax. If you lived in your house for two of the past five years you can excluded up to $250,000 ($500,000 if married filing joint) in gain on the sale of your house.

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R

rnmccandlessAuthor

Thank you for the quick reply, @DavidD66. Do you have any sources for this information, such as any links to the colorado.gov website so that I can make sure I'm within the guidelines?

Thank you,

Nick

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DianeW777

Yes, both the Colorado (CO) capital gain deduction instruction and the CO instructions do not require any add back for the sale of a home. CO starts with the federal taxable income and then they provide instructions on what must be added back and what items might reduce the CO taxable income.

@rnmccandless

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