Capital Gains fees for house Sold 11 months after purchase

[mmketterlin]

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?

[TomYoung]

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]

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]

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]

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.