Joint ownership of sold home

My wife and I jointly owned a home in NC. I moved to PA in August 1997, then we sold our home in NC in October 1997, then my wife moved to PA in November 1997. On our joint federal income taxes, we postponed the gain from the sale. Which state, if either, can claim income tax from the gain on the sale of the home?

[Edited by gbrazer on 12-12-2000 at 03:10 PM]

If your home was your principal residence for two of the five years before the sale, then $500,000 of any gain is excluded from federal income tax. Anything over that is taxed by the federal government and by both North Carolina and Pennsylvania. North Carolina taxes it because that is where the property is. Pennsylvania taxes it because you and your wife ar Pennsylvania residents. However, you are entitled to a credit against the Pennsylvania tax for tax paid to North Carolina.

If the gain was less than $500,000 and no part of the home was used for business, then there is no federal or state tax.