Capital Gains

[Nicky47]

If capital improvements are made twice during the period of ownership, are both deducted in determining capital gains tax?

AND

Other than the standard $250k reduction for one person in capital gains, is there any other criteria that might help to reduce Capital Gain tax? (i.e. low income or over 60?) 

[Gabriella_EA]

Hello Nicky47!

Thank you for joining us for today's event, and for your questions!

It sounds like you're a single filer, asking about selling your primary residence (the home you primarily live in). Under those assumptions, here are my answers for you:

When selling a home, you can include any and all capital improvements made to the home during your period of ownership to increase your basis in your home, and therefore reducing any capital gains on the sale of the home. It doesn't matter if you made capital improvements just once, or once every year of ownership - they'll qualify. TurboTax will ask you about this when you're working on reporting the sale of your home.

If the $250,000 exemption on capital gains tax isn't enough to cover the entire gain on the sale of your primary residence, there are other factors that can be considered in lowering how much tax you'll pay. While being over 60 doesn't affect anything (being 65 or older would increase your standard deduction, though), there are favorable long-term capital gain rates based on your overall taxable income. Taxable income is income after the standard deduction, among other things. If your taxable income is under $44,625 for 2023, you would qualify for the 0% long-term capital gains tax rate. After that, your long-term capital gains are taxed at a maximum of 15% until your taxable income exceeds $492,300.