Deductions & credits

The long-term capital gain tax is based on the amount over $75,900 (the start of the 25% tax bracket), not $153,100 (the start of the 28% tax bracket).

It is also based on "taxable income", which is after your exemptions and Standard Deduction/Itemized deductions.  So if you have AGI of $124,378 (including the gain from the sale) and use the Standard Deduction and 2 exemptions, that brings your taxable income down to $103,578.

So that leaves you with $27,678 that is subject to the 15% long-term capital gain tax, which equals $4152 of tax.


However, that 'extra' income could affect other things on your tax return, effectively increasing the amount of tax.  Also, don't forget State taxes.  If it was ever rented out or used as a Home Office, the depreciation will also be factored in (usually taxed at 25%).

You also said that is your "profit".  Some people misunderstand how that works.  Your mortgage has nothing to do with it, but only the purchase price, cost of improvements, depreciation, and selling price (including selling expenses) fater into the "Gain" of the sale.

View solution in original post