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What kind of property is it? If it is just a piece of investment property, the difference between the sales price ($340,000) and the cost ($85,000) is long term capital gain. This gain ($255,000) is taxed at either 15% (tax would be $38,250) or 20% (tax would be $51,000) depending on the Taxpayer's income from all sources. The base Long-Term capital gains rate is 15% However, if it exceeds a threshold (varies by filing status) the tax rate jumps to 20%. And, on top of that, there is a 3.8% Net Investment Income Tax (NIIT) which would be another $9,690.
There are some variations that could come into play. If the property was rental real estate, the gain would be increased by any depreciation that had been taken on the property. This additional gain would be taxed at ordinary tax rates as "depreciation recapture".
Also, if this property were a principal residence for the Taxpayer(s), they could exclude $250,000 of the gain for a single person or $500,000 of the gain for a married couple. This holds true if they lived in the property for a total of 2 years in the immediately prior 5 years.
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