How do I calculate capital gains on the sale of a second home.

[patrick-molenda]

I am thinking of selling my second home in Florida which I currently rent out.  I have owned the home for a little over 10 years.  I will realize an approximate $100K capital gain.  How do i calculate the capital gains tax associated with the sale of this property?

[Anita01 · Accepted solution]

This is a much more complex calculation than you think.  Capital gains tax rates depend on your OTHER income, as explained in this article from the IRS.  The other complication for you is that, you will have to pay tax on any depreciation you TOOK or COULD HAVE TAKEN while the property was rented.  That means lowering your cost basis by that amount of depreciation to calculate a gain, then paying tax on the depreciation amount, which is taxed at ordinary income rates and not capital gains rates.  I really advise you to find a local tax person to help you with this calculation.