Can I avoid estimated tax payments on the sale of a "second home"property, that was done on 4-16-2019,if my tax withholdings of 2018 equals my tax withholdings of 2019?

[anaa-7]

It was never used as a rental property. My daughter placed it in my name for collateral purposes, due to the large loan that I gave her.
She could not pay the loan back there fore I sold the property.
Please tell me if I can just pay the capital gains tax by 4-15-19 due to my income tax with holdings being the same as last years?
Thanks so much community.

[Anonymous_ · Accepted solution]

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@anaa-7 wrote:
Please tell me if I can just pay the capital gains tax by 4-15-19 due to my income tax with holdings being the same as last years?

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Yes, you can avoid the penalty for underpayment of estimated tax if you owe less than $1,000 in tax for 2019, or if you pay at least 90% of the tax owed for 2019 or 100% of the tax shown on your return for 2018, whichever is smaller. 

See https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes

[anaa-7]

I am  sooo appreciative of your prompt response to my inquiry.  I also appreciate that your substantiate it with the explanation by the IRS. 

I am now much more happier and at ease. You made my week!

God bless your giving compassionately kind heart.

Another question though.... It seems that if a person earns roughly less than 38K annually; that one can avoid capital gains.

Is my understanding of this inaccurate?

Thanks again. Have a blessed week  super tag team.  

[Anonymous]

maybe as to the $38,000.   the capital gain increases your taxable income which can affect your taxes.   for example say you have obamacare and get tax credits to pay for it.  increasing your income may result in some of these credits having to be paid back.   if you itemize, medical expenses deduction will be reduced.

in addition we don't know what the amount of the gain is.   

[Texas Roger]

Your understanding is not accurate. Your capital gains are added to your other taxable income to determine the capital gains tax rate. If the total remains below the maximum for 0% capital gains tax, there would be no additional tax. But if the total exceeds the 0% capital gains threshold, the amount above the 0% threshold is taxed at 15% and the amount above the 15% capital gain threshold is taxed at 20%. 

Here are the capital gains tax rates by income and filing status:

Tax rate            Single                            Joint                                      Head of household
0%                   $0 to $38,600                 $0-$77,200                         $0-$51,700
15%            $38,601-$425,800        $77,201-$479,000               $51,701-$452,400
20%          $425,801 and up             $479,001 and up                  $452,401 and up

[anaa-7]

However; as I understood what a previous response explained, if my 2019 withholdings of tax, (despite any credits that I might receive), equals my 2018 withholdings of tax, I do not have to make estimated tax payments; as long as my MAGI is less than 150K.  This being so regardless of the capital gains  of the 2nd property.

I also have to check with a tax pro because the 2nd property was actually collateral against a loan. 

It was never used for profit.

But I thank you for your assistance.

[anaa-7]

I have a related question that I would like your help with, if you can, please.

Can the cost basis of a home that was placed in your name for collateral purposes be the value of the debt that is owed to you when it is sold?

Thanks so much.