What tax rate applies on capital gains on the sale of the main residence where the spouses have earned a combined gross income for the year of $30,000 - in California?

[DoninGA]

It depends on how long you owned and lived in the home.

If you sold your primary personal residence and you lived in and owned the home for at least two years in the five year period on the date of sale, you do not have to report the sale if your gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).

Gain or Loss = Sales Price minus Sales Expenses minus Adjusted Basis (Purchase Price plus the cost of improvements prior to the sale)

If you had a gain greater then the exclusion amounts then you would have to report the sale. Also, if you received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.

[lindamackellar-g]

Thanks for replying.

- the sale needs to be reported as the gain is above the exclusion amounts

- primary residence, both spouses lived in the residence for the 2 years prior to sale (10 years)

- but what is the tax rate to be applied to the gain given their income level for the tax year (combined gross income of $30,000 not including the capital gain)

thanks

[DoninGA]

Again, it depends on the total income you will be reporting on the CA return including the gains on the home sale.

In California, you could be liable for a capital gains tax from one percent up to 37% depending on the nature of the gains and the price tag.

[Hal_Al]

 Q. What is the tax rate to be applied to the gain given their income level for the tax year (combined gross income of $30,000 not including the capital gain)?

A. The federal long term capital gains rate is 0% on taxable income in the first bracket, then 15% up to the next bracket.  At $30K other income and using  the standard deduction (under 65), for 2023, the first $57,550 of the excess gain (above the $500K exclusion amount)  will not be taxed (actually taxed at 0%).  The rest will be taxed at 15% (the 20% rate will kick in at  $517,200). 

California allows the same home sale exclusion ($500K) as the feds.  But, the excess is taxed at ordinary income rates (no 0%).