I live in Virginia but own land in Arizona that I would like to sell. I plan to use the sale of the land to pay off the existing mortgage on my primary residence in Virginia. Will I still pay capital gains? I have owned the land for three years and it has appreciated quite a bit. Thanks.
Will I pay capital gains on my land sale?
August 11th, 2010 
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Yes.
You will pay capital gains tax on the profit for federal along with Arizonza and Virginia income tax. Virginia should give you a credit for the Arizona taxes though.