home sale

[Talknsing]

I have lived in my residence for 15 yrs. I plan on selling it now. I paid $310,000 at purchase and plan to sell it for approximately $450,000. What are the best options to protect the gains from being taxed ?

[Vanessa A]

1.  If you owned and lived in the home for 2 out of the last 5 years, then you may qualify for the home sale exclusion which would exclude up to $250k ($500k if married filing jointly) of the sale of your home.  In order to qualify you must not have used the home sale exclusion in the past 2 years. 
2. If you do not qualify, the rest of your income will play a part in the tax rate. This would be a capital gains sale so  your tax rate would be between 0% and 20%. The capital gains rates are as follows based on income
   • Zero percent rate for the following income
     • $44,625 for single or MFS
     • $59,750 for HOH
     • $89,250 for Married Filing Jointly
   • Fifteen percent for income more than above but less than below
     • $276,900 for MFS
     • $492,300 for Single
     • $523,050 for Head of Household
     • $553,850 for Married Filing Jointly
   • Twenty percent for the amount that your taxable income is over the 15% level. 

[tagteam]

If you have lived in the residence for at least two out the last five years leading up to the closing of the sale, and used the residence as your primary residence, you would qualify to exclude all of the gain.

See https://www.irs.gov/taxtopics/tc701