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mmketterlin
New Member

Capital Gains fees for house Sold 11 months after purchase

Bought a house 3/1/2017, selling 1/9/2018.
Profit is $54,000... and that is before subtracting $20,00 of home improvements.  

My tax bracket is under $37,000...  will I be expected to pay 15% on the $54,000 in 2018?
4 Replies
TomYoung
Level 13

Capital Gains fees for house Sold 11 months after purchase

If you've figured your "profit" correctly then that nets out to $34,000 after subtracting the improvements.

The sale is "short term" and will be taxed at your "ordinary" marginal income tax rates.  I'm guessing, by your reference to "15%" and "$37,000" that you're filing "single" and expect to be in the second tax bracket, ordinarily.  As long as that $34,000 profit keeps you within that bracket those dollars will be taxed - more or less - at a 15% rate.  But if that $34,000 bumps you over the top dollar amount for the 15% bracket - $37,950 - those additional dollars will be taxed at 25%

Tom Young

mmketterlin
New Member

Capital Gains fees for house Sold 11 months after purchase

Oh!  So, my $34,000 profit is included in the $37950 tax bracket!?  ... I thought that was just my income bracket?  will definitely exceed that amount if attached to my yearly income
Hal_Al
Level 15

Capital Gains fees for house Sold 11 months after purchase

Q. my $34,000 profit is included in the $37950 tax bracket!?
A. Yes. Example:
Wages and other income :  $30,000
Short term capital gain:      + 34.000
Total Income                     =  64,000
Standard deduction               - 6350
Personal exemption              - 4050
Taxable Income                = 53,600
Top of 15% Bracket           - 37,950
                                          = 15,560 Taxed at 25%
 
The smart thing to do (tax wise) is postpone the sale (closing) til 3/2/18 so that the gain is long term. In which case, a $34K gain will have $15,560 taxed at 15% and 18440 taxed at 0%. Tax savings $4322.

But your gain may be lower, You also get to deduct any expenses of sale (closing costs and Real estate commission). Technically, you add them to your cost basis.
TaxGuyBill
Level 9

Capital Gains fees for house Sold 11 months after purchase

Did you use it as your Main Home?  If so, why did you move?  There are a few situations that could reduce or eliminate the taxes if it was your Main Home and you moved for qualified reasons.
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