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pinti
New Member

Do I have to pay capital gains tax?

 Im 70yr retired, ssi is 1725/mo before medicare insurance is taken out, rental income 11,000 for this year 2017, and no other income. Purchased house in FL as primary home then moved to SC and primary house is now in SC. Rented out old primary house 5 years ago and now selling it. Purchased FL home for 84500 and selling for 135000. 

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Accepted Solutions
Hal_Al
Level 15

Do I have to pay capital gains tax?

Yes. Since you did not live in the house (as your primary residence) for 2 out of the 5 years prior to sale, you may not exclude the capital gain form the sale.

Your income is low enough to put most of the gain in the 0% long term capital gain tax rate. But the gain is still considered part of your gross income and this means that up to 85% of your social security benefits will become taxable.

In addition, you will have to report depreciation recapture as income. Depreciation recapture is taxed at ordinary income tax rates.

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2 Replies
Hal_Al
Level 15

Do I have to pay capital gains tax?

Yes. Since you did not live in the house (as your primary residence) for 2 out of the 5 years prior to sale, you may not exclude the capital gain form the sale.

Your income is low enough to put most of the gain in the 0% long term capital gain tax rate. But the gain is still considered part of your gross income and this means that up to 85% of your social security benefits will become taxable.

In addition, you will have to report depreciation recapture as income. Depreciation recapture is taxed at ordinary income tax rates.

Critter
Level 15

Do I have to pay capital gains tax?

You will have to report the sale and the depreciation taken will be taxed as ordinary income like the rent, then the rest of the profit is  cap gain will be taxed at the cap gain rates. 

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