AGI LEVEL THAT TRIGGERS 0% CAPITAL GAINS TAX RATE FOR SALE OF RESIDENCE

[jda46]

I am preparing returns for 83 year old uncle. He sold his home in 2022 for about $500,000 (cost basis about $75,000). His AGI is about $9,000 and has $0 taxable income. With such a low income level will he have to pay any CGT at all? I am using the Deluxe version of TurboTax -- how do I include this sale/gain matter using this version? Background info:  he had to sell his home to move into a mental health facility; is on Medicare; has no supplemental insurance. To have to pay a large CGT will further deplete his home sale proceeds, from which he pays about $10,000 per month for his care (a soon-to-be dire situation).  HELP, Please!

[Bsch4477]

Since he lived there a long time he gets a $250000 exemption. That plus his cost basis brings his capital gains to about $175,000. The zero percent income bracket for a single filer ends at $41,675 and is 15% after that. But his cost basis includes not only what he paid for it but also capital improvements. He must have made improvements over the years—new roof , remodel, etc which expenses can be added to the cost basis. And of course the expenses of the sale, realtor’s commission, etc. would reduce the reportable proceeds. Remember the capital gains rate bracket reflects taxable income, not AGI, so his standard deduction also lowers his taxable income. 

[fanfare]

Once your uncle is completely destitute, Medicaid will kick in and pay the nursing home or other facility for the rest of his life, if he can find a facility with a bed.

That's America.

@jda46