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Real Estate Capital Gains Rate When You Have No Income.

I purchased a home as my primary residence this year, and I'm planning to tear it down and rebuild it to a new house, and then sell it within a years from now. Additionally, I do not have any income. Do I pay any tax if my property profits from sale? 

3 Replies
Hal_Al
Level 15

Real Estate Capital Gains Rate When You Have No Income.

Yes and no. You are required to file and report the capital gains on your tax return, if your total income (including the capital gain) is more than $10,400 (Single Filing status).

Long term capital gains (property owned more than 365 days) are taxed at 0%, effectively up to up to $48,000, for a single person  with no other income.

Short term capital gains are taxed as ordinary income. The first $10,400 will be tax free (since you have no other income), the next $9325 at 10%, after that 15%. Higher rates apply above $37,850.

The numbers will be different if you are somebody's dependent.

You can use this tool to estimate your tax: https://turbotax.intuit.com/tax-tools/calculators/taxcaster/?s=1

emmaliamsparks
Returning Member

Real Estate Capital Gains Rate When You Have No Income.

If my mother added me to the deed (joint tenants with rights of survivorship) in May of 2021 but then we need to sell this year what would I be taxed in regard to capital gains tax, I have 0 income, so what bracket would I be in for this? 

 

 

I've already heard the opinions on not doing that but its already done and we might need to move due to circumstances.  

RaifH
Expert Alumni

Real Estate Capital Gains Rate When You Have No Income.

It depends if you own the home for longer than a year. You also may be eligible for a partial exclusion of your portion of the gain if you need to move due to unforeseen events, health reasons, or work and you lived in the home prior to moving.

 

If you do not own the home for longer than a year, your portion of the gain would be taxable as ordinary income. A portion of this would be excludable depending on your filing status, but the rest is taxable.

 

If you own the home for longer than a year, it would be considered a long-term capital gain which is taxed at lower rates than ordinary income. You will not pay any capital gains if your taxable income, including the gain from the sale of the home is less than:

  • $41,675 if you are single or married filing separate in 2022. 
  • $55,800 if you are filing as Head of Household
  • $83,350 if you are married filing jointly

 

@emmaliamsparks

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