Why does Turbo Tax show I owe Long Term Capital Gains Tax on the sale of a second home, when under IRS guidelines I fall in the Less than $78,750 AGI and below the 15% Tax Rate?
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How much other income do you have besides the LT cap gains?
If at any point in time your second home was a rental, a portion of your gain may be taxed at a maximum tax rate of 25% for depreciation recapture (unrecaptured section 1250 gain from selling section 1250 real property).
When you look at that $75,780 figure remember that, for purposes of determining your LT capital gain tax bracket, your LT capital gain itself is added to your ordinary income.
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