2017 Single and sold a residence property with a profit over $250K. If I have zero income for 2017 will I have to pay long term capital gains on the amount over $250K ?

[jeannebruns]

Tax Year 2017

Filing Status Single [but looking]

Residential Property Sold for over $250K [Held for 10 years should be long term capital gain]

Working & Living Overseas in 2017 so assuming I have zero or less than $39K in reportable income will I have to pay captial gains on the amount over $250K?

[SweetieJean]

Was this your personal residence, or a rental?

[jeannebruns]

Yes.  This will qualify as my personal residence.

[SweetieJean]

"If I have zero income for 2017"
No income at all for 2017?  How are you supporting yourself?

[jeannebruns]

is that relevant?

[SweetieJean]

Yes, because that may affect the capital gains tax rate; or the ability of someone else to claim you as a dependent.  Users also sometimes say they have no income when they mean they have no earned income (i.e., wages.) However, other types of income can be taxable: unemployment comp, Social Security, retitrement plans, scholarships, etc..

[TaxGuyBill · Accepted solution]

All of your income is reportable, and goes on your tax return.  Even your Foreign Earned Income.

If you meet certain rules, you may not directly owe tax on your Foreign Earned Income.  However, that Foreign Earned Income DOES still affect the taxation of your other income, including your capital gains.

In other words, if your total income (INCLUDING your Foreign Earned Income) are in the 25% tax bracket or higher, those capital gains will be taxable (usually 15% for Federal, plus State).  It is also possible it could be subject to the 3.8% Net Investment Income Tax.

[jeannebruns]

Thanks TaxGuyBill.  That answers my question!

[juliob]

Yes, any sales gain over the $250k (assuming you qualify for the exclusion) will be taxed. For more information on Sale of Home, please click on the following link: https://turbotax.intuit.com/tax-tools/tax-tips/Home-Ownership/Tax-Aspects-of-Home-Ownership--Selling...

Depending on how much income you will make overseas will affect your long-term capital gains on the sale of your home.

Fortunately, capital gains receive special treatment vs ordinary income:

• Long-term gains are treated much better. Long-term gains are taxed at 15% or 20% except for taxpayers in the 10% or 15%t bracket. For low-bracket taxpayers, the long-term capital gains rate is 0%. There are exceptions, of course, since this is tax law. https://turbotax.intuit.com/tax-tools/tax-tips/Investments-and-Taxes/Capital-Gains-and-Losses/INF120...

Therefore, your overall income will dictate your capital gains tax rate...

If you purchased Turbotax Deluxe (or higher) or acquired PLUS product, you may speak to a live tax advice expert over the phone if you want to get in to the details of your tax situation.