I am going to combine both your follow ups into one answer. The key part you write here is this: "It will likely be a loss of income upon the sale." So if it is a loss as you wrote, there is no income tax impact.
The question really is how much did you pay for it, to test the question of is a loss. If you sell it for $40K and you paid $42K it is a loss. If you sell it for $40K and you paid $30K then it is a gain. Since you held it 15 years, it is a long-term gain.
The Long-term capital gains tax rates for the 2024 tax year are as follows:
|
FILING STATUS
|
0% RATE
|
15% RATE
|
20% RATE
|
|
Source: Internal Revenue Service
|
|
Single
|
Up to $47,025
|
$47,026 – $518,900
|
Over $518,900
|
|
Married filing jointly
|
Up to $94,050
|
$94,051 – $583,750
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Over $583,750
|
|
Married filing separately
|
Up to $47,025
|
$47,026 – $291,850
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Over $291,850
|
|
Head of household
|
Up to $63,000
|
$63,001 – $551,350
|
Over $551,350
|
In addition, those capital gains may be subject to the Net Investment Tax, an additional levy of 3.8 percent if the taxpayer’s income is above certain amounts. The income threshold depends on the filer’s status.
(individual, married filing jointly, etc.) and are not adjusted for inflation.
The IRS statutory income thresholds are as follows (Based upon Modified Adjusted Gross Income):
- Married filing jointly — $250,000
- Married filing separately — $125,000
- Single or head of household — $200,000
- Qualifying widow(er) — $250,000
Thanks again for the follow up questions @Sedutra
All the best,
Marc
Employee Tax Expert
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