Capital Gains tax on the sale of a second home

[laker2733]

I recently sold a condo that I owned for 30 years. When calculating the capital gain tax on the profit of the sale, I heard that the 2022 tax laws will exempt the tax if the seller's taxable income is below a certain amount. Is that true, and if so, what is TI amount?

[NCperson]

there is no 'exclusion' for the capital gain tax on the sale of a 2nd home, so it depends on your income, but for most people the tax will be 15% federal, plus your state tax and if it kicks you into higher income levels, there is a 3.8% NIIT tax 

2022 capital gains tax rates

            Single                             Married, filing jointly     Married, filing separately    Head of household

0%	$0 to $41,675	$0 to $83,350	$0 to $41,675	$0 to $55,800
15%	$41,676 to $459,750	$83,351 to $517,200	$41,676 to $258,600	$55,801 to $488,500
20%	$459,751 or more	$517,201 or more	$258,601 or more	$488,501 or more

[laker2733]

Does the income amount include the money received for the sale of the 2nd home?

[NCperson · Accepted solution]

yes; it includes the capital gains - not 'the money' - calculated by the sale of the 2nd home.  so it does not include the sales price of the 2nd home, but rather the sales price less the cost basis less the improvements less the selling expenses....

[laker2733]

Thanks for the response.

[SweetieJean]

and FYI:  Any mortgage payoff does not factor into the calculation. That is, Capital Gain does not equal the cash you ended up with at closing.

[laker2733]

Is the tax rate for capital gains based on taxable income, total income, or adjusted gross income?

[SweetieJean · Accepted solution]

Tax rates are based on Taxable Income.  But also see:

Net Investment Income Tax | Internal Revenue Service (irs.gov)