I sold my home in 2024 which resulted in a big CG. I am owing IRS and CA six figure tax. Is there anything I can do in remaining days of 2024 to save on this tax on CGs

[xmasbaby0]

Six figure tax on the sale of your home?   You should be seeking local paid professional tax help if you sold a home for so much that your tax is six figures, instead of trying to use TurboTax.

[nmvempaty]

Very interesting answer. There are some very competent users on this forum and I want to hear what they have to say. Dont you worry about me, I may go to the CPA eventually but I want to go to them pre-equipped with as much information as possible.

Thanks for the response anyway!

[rjs]

You're not going to get a lot of useful information because you haven't provided any details. Here are some things to consider.

How do you know that your tax will be six figures? Is that just the tax on the gain from selling the home, or is it the tax on all of your income?

Did you take into consideration the federal exclusion of gain for the sale of your home? Do you know if you are eligible for the exclusion of gain? I don't know if California has a similar exclusion.

Was the gain short-term or long-term? If it was long-term, did you properly apply the lower tax rates for long-term capital gain?

How much is the gain from selling your home? How much is the tax? About how much is your other income, besides the gain on your home?

What is your filing status for 2024? Were you the only owner of the home?

How did you calculate the gain? Did you add improvements to the basis? Did you subtract a broker's fee or any other selling expenses? How did you acquire the home that you sold? If you inherited it, did you use the stepped-up basis?

Sell any investments you are holding that will produce losses. The capital losses will offset some of the gain on the home.

If you can make a deductible IRA contribution, that will reduce your tax.

As xmasbaby0 suggested, consult a local tax professional.

[Opus 17]

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@nmvempaty wrote:

Very interesting answer. There are some very competent users on this forum and I want to hear what they have to say. Dont you worry about me, I may go to the CPA eventually but I want to go to them pre-equipped with as much information as possible.

Thanks for the response anyway!

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There is very little you can do specifically in this situation.  There are a lot of general tax avoidance strategies, like contributing to an IRA, maximizing your 401k if you have not already, and so on.

Because this is a capital gain, you can offset it if you have investments you can sell for a capital loss, assuming you want to sell those investments anyway.  Just don't re-buy the same or similar investments for at least 31 days to avoid the wash sale rule.

You can minimize the capital gains on your house by taking advantage of any allowable adjustments to cost basis that you can prove, such as improvements and certain closing costs (see publication 523 on page 8).

https://www.irs.gov/forms-pubs/about-publication-523

[nmvempaty]

Thanks for the response. Yes I did all calculations and am reasonably sure that my calculations for long term capital gains tax for federal and CA are correct. We also have maximized the pre-tax 401K contributions etc. My purpose of posting a question in this forum was to see if anyone has heard of/ has experience making any alternative investment strategies that can help reduce taxes on long term capital gains.

[dmertz]

As rjs said, you could consider tax-loss harvesting to effectively move taxable income to future years, but given that the market has been generally up for the past few years, you might not have any investments that are presently valued below their cost basis.