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galatiansfivetwentytwo
Returning Member

What is the tax rate on the Gain from the sale of a primary home after 12 months of residence?

What is the tax rate on the Gain from the sale of a primary home after 12 months of residence? Is it a flat tax rate or fixed on one's income. What form is used to claim the Gain? TY

5 Replies
Opus 17
Level 15

What is the tax rate on the Gain from the sale of a primary home after 12 months of residence?

An accurate answer is actually quite complicated.  

First, why are you moving?  Choice, or a situation requires it?

Second, did you own the home more than 1 year (366+ days) or exactly 1 year or less (365 or fewer days).

Third, will your taxable income (including the gain on the sale) be more or less than $450,000?

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
galatiansfivetwentytwo
Returning Member

What is the tax rate on the Gain from the sale of a primary home after 12 months of residence?

We are moving by choice. We are builders and sell our primary home after two years of residence. We do not have confidence that the market will hold for another year.

We have not sold our home yet. We plan to close after November 8th making it at least 366 days.

The taxable income will be approximately $100k.

galatiansfivetwentytwo
Returning Member

What is the tax rate on the Gain from the sale of a primary home after 12 months of residence?

The gain from the sale will be $100k (cost to build the home- the net from the sale).

Opus 17
Level 15

What is the tax rate on the Gain from the sale of a primary home after 12 months of residence?


@galatiansfivetwentytwo wrote:

We are moving by choice. We are builders and sell our primary home after two years of residence. We do not have confidence that the market will hold for another year.

We have not sold our home yet. We plan to close after November 8th making it at least 366 days.

The taxable income will be approximately $100k.


Because you are moving for choice, you don't qualify for a partial exclusion of the gain.

 

If you hold the property more than 1 year, your gain will be a long term capital gain, so the rate will be 15%.  If your total taxable income including the gain is more than the amount shown in this table, your rate will be 20%.

https://www.nerdwallet.com/article/taxes/capital-gains-tax-rates

 

Because you will have a lump sum of income in November, you will owe an estimated tax payment by January 15, you can make the payment at www.irs.gov/payments.  Be sure to select "2022" and "estimated payment" from the menus.  15% should be fine.  If you don't make the estimated payment, you could be charged an under-payment penalty even if you pay in full when you file your tax return. 

 

Most states do not have special capital gains rates and will tax your gain as regular income, state tax rates vary from 3%-13% depending on your income and your state.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
galatiansfivetwentytwo
Returning Member

What is the tax rate on the Gain from the sale of a primary home after 12 months of residence?

Thank you for your assistance!

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