Long term capital gains

[marciejpyke]

I'm selling a rental property and I'll be profiting around $125k. 

My income puts me in the 0% capital gains bracket, but from what I'm understanding I would still need to pay 15% on any profits that brings my income past $40,400.  This is if I dont do the exchange of course.  Do I have this right or no? 

Thank you in advance! 

[Critter-3]

Ok... you really need to talk to somebody locally to discuss this correctly.   Your "profit" will have some depreciation recapture which is taxed as ordinary income at a rate not to exceed 25% and if you have not been properly depreciating the property over the years  then RUN for professional assistance so you are not double taxed ... this is not a DIY project and TT will not handle it at all.  

[Hal_Al]

Q.  From what I'm understanding I would still need to pay 15% on any profits that brings my income past $40,525 (2021 number). Do I have this right or no? 

A.  Yes, but not exactly.  The $40,400 amount is taxable income, not your total income or even your AGI.  Assuming you get a $12, 550 standard deduction, it's essentially you pay 15% on any profits that brings your income past $53,075.  But the depreciation recapture portion of the gain is taxed as ordinary income, not the 15% capital gain rate (probably 22%, but not more than 25%).