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capital gains tax on home sale

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  • #16
    Blah, you're right.   Sounded too good to be true ---just better for the buyer then with paying the closings and lower stated property.

    "stuck" with a tax bill on earnings -- a good problem to have in the end.



    • #17
      To the OP,


      There is an option that wasn't mentioned from what I saw:

      You could take a sabbatical from work (theoretically possible) to make your capital gains rate and marginal tax bracket lower, then sell the house in that year.  That would possibly decrease your long term capital gains rate to 15%, but probably wouldn't affect state/local taxes (from what I understand--I live in a zero state tax area).

      Another option would be to do even more renovations to the home that you might enjoy if you are going to stay in the home for awhile. Then those renovations could be deducted from the appreciation/long term capital gains.  The "downside" is that the new movie theater room and olympic swimming pool might further increase the value of the home!  :P

      Could you sell part of the land the home is on? Many times it is the land itself that has most of the value.  Depending on the size of the property, that could be possible.  I'm not sure how the taxes would be assessed for a partial sale though.

      As previously mentioned, I like the idea of just not selling.  Unrealized capital gains don't have to be paid (for now), and can be stepped up if left to your heirs.

      If you have to move, to quote WCI, it sure beats a kick in the teeth to have the kind of value increase that your home has gained.


      Good luck!




      • #18
        Good point @Benjamin, not sure how far back they look on the capital gains bracket to report if it needs the 2 of 5 year mark too or not --- that probably would be too complex for bracket.


        • If you’re in the 10% to 15% tax bracket, your capital gains tax rate is zero.

        • If you’re in the 25% to 35% tax bracket, your capital gains tax rate is 15%.

        • If you’re in the 39.6% tax bracket, your capital gains tax rate is 20%.

        Married Filing Jointly or Qualifying Widow(er)

        Taxable Income Tax Rate
        $0—$18,550 10%
        $18,551—$75,300 $1,855 plus 15% of the amount over $18,550
        $75,301—$151,900 $10,367.50 plus 25% of the amount over $75,300
        $151,901—$231,450 $29,517.50 plus 28% of the amount over $151,900
        $231,451—$413,350 $51,791.50 plus 33% of the amount over $231,450
        $413,351—$466,950 $111,818.50 plus 35% of the amount over $413,350
        $466,951 or more $130,578.50 plus 39.6% of the amount over $466,950