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Level 1
June 8, 2022
Question

Capital gain

  • June 8, 2022
  • 1 reply
  • 9 views

Sold my main home last year and this other home I am selling, I’ve never lived in it. So when I sell that one will I have to pay capital gain on it if my income is low? I heard if I earn under a certain amount I would not have to pay any capital gain on the second home. 

    1 reply

    Level 6
    June 8, 2022

    Hello @Lynnk1 

     

    Yes, there is a income limit on capital gains. Please see below (the source link follows).

     

    Capital Gain Tax Rates

    The tax rate on most net capital gain is no higher than 15% for most individuals. Some or all net capital gain may be taxed at 0% if your taxable income is less than or equal to $40,400 for single or $80,800 for married filing jointly or qualifying widow(er).

    A capital gain rate of 15% applies if your taxable income is more than $40,400 but less than or equal to $445,850 for single; more than $80,800 but less than or equal to $501,600 for married filing jointly or qualifying widow(er); more than $54,100 but less than or equal to $473,750 for head of household or more than $40,400 but less than or equal to $250,800 for married filing separately.

    However, a net capital gain tax rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% capital gain rate.

    There are a few other exceptions where capital gains may be taxed at rates greater than 20%:

    1. The taxable part of a gain from selling section 1202 qualified small business stock is taxed at a maximum 28% rate.
    2. Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate.
    3. The portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum 25% rate.

    https://www.irs.gov/taxtopics/tc409 

     

    Thank you!

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