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Level 2

How to calculate capital gains tax

State of WA residency.

If I sell a house and make a profit of 150k and my income is only 10k per year.

Single tax payer

 

Can someone calculate long term capital gains tax in above situation?

1 Best answer

Accepted Solutions
Level 15

How to calculate capital gains tax


@curious4913 wrote:

Ok so if gain is 150k and income is 10k ...I have to consider total income of 160k and so gains tax rate would be 15%? of 160k? which will be 24k?


No, you would also have to take your standard (itemized) deductions into consideration and then the fact that the first $39,375 is taxed at the 0% rate - so, far less than $24k.

View solution in original post

10 Replies
Level 15

How to calculate capital gains tax

Has the house been your primary residence for at least two years?

 

If your gain was more than  $250,000 filing Single, or more than $500,000 filing Married Filing Jointly the sale must be reported on your tax return.  Whether you re-invested the gain in to another house is irrelevant.  If you  have a Form 1099-S go to Federal>Wages and Income>Less Common Income>Sale of Home (gain or loss)

If you owned and lived in the home as your primary residence for at least 2 of the last 5 years on the date of the sale, you do not have to report the home sale if the gain is less than $250K filing Single, or less than $500K filing Married Filing Jointly (and you both owned and lived in the home for at least 2 years).

  • If you are using online TT, you need Premier or Self-Employed software to report the 1099-S
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Level 14

How to calculate capital gains tax

Your capital gain is your net sale proceeds less your "adjusted cost basis" in the home.  Your adjusted cost basis is the original cost of the home, plus the cost of any capital improvements you've made to the home since purchase.  A capital improvement is something that materially improves the value of the home, such as a room addition or a kitchen remodel.  Repairs are not capital improvements.

 

You can see the 2019 capital gains tax rates here: https://www.nerdwallet.com/blog/taxes/capital-gains-tax-rates/

 

Of course, if the house was your primary residence, you may qualify for a capital gains exclusion, as detailed by @xmasbaby0.

 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.**

Anonymous
Not applicable

How to calculate capital gains tax

No we can't if the house wasn't your qualifying primary residence.   the sales price is offset by the cost to come up with the gain and it may be that the rate on it is 0%

 

 

if your qualifying primary, then the entire gain should be tax free unless you sold another primary residence within the last 2 years.  

Level 2

How to calculate capital gains tax

So you can not help me calculate unless house qualifies as primary residence?

I understand if it qualifies as primary residence ..gains will zero as 150k is less than exemption limit of 250k.

 

But why can not you help me calculate if it does not qualify as primary residence?

I can not figure out how to calculate myself ..that is why I asked on this forum. 

Level 14

How to calculate capital gains tax

<<But why can not you help me calculate if it does not qualify as primary residence?>>

 

To figure out your capital gain tax, determine the amount of your capital gain, then multiply it by the appropriate rate for your tax bracket.  Remember to include the amount of the gain in your income when you're determining your bracket.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.**

Level 2

How to calculate capital gains tax

Ok so if gain is 150k and income is 10k ...I have to consider total income of 160k and so gains tax rate would be 15%? of 160k? which will be 24k?

Level 14

How to calculate capital gains tax

The IRS offers a worksheet on pages 16-17 of this reference:  https://www.irs.gov/pub/irs-pdf/i1040sd.pdf

**Answers are correct to the best of my ability but do not constitute tax or legal advice.**

Level 15

How to calculate capital gains tax


@curious4913 wrote:

Ok so if gain is 150k and income is 10k ...I have to consider total income of 160k and so gains tax rate would be 15%? of 160k? which will be 24k?


No, you would also have to take your standard (itemized) deductions into consideration and then the fact that the first $39,375 is taxed at the 0% rate - so, far less than $24k.

View solution in original post

Level 2

How to calculate capital gains tax

ok so roughly 160k-12k (std. deduction)-40k=108k x 15% =  about 16k correct?

Level 15

How to calculate capital gains tax


@curious4913 wrote:

ok so roughly 160k-12k (std. deduction)-40k=108k x 15% =  about 16k correct?


@curious4913 Yes, that would be correct.

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