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Are you asking what income tax is paid on a home that is sold for $157,500?
How much tax is paid depends on what the house was initially purchased for in the beginning.
If you purchased the house for $100,000 and sold it for $157.500 you would owe capital gains tax on 57,500
The capital gains rate is 0% if you are in the 10-15% tax bracket, and 15% above that up to $400,000 where it is 20%
Do you have any further questions about this, or were you referring to another type of tax?
I am not sure. the property was bought over 25 years ago and has no mortgage. it is a government subsidized rental property. i received it in divorce. I teach and am three years out from retiring. I was afraid of the tax base and offered to finance the place. what tax will come with that option? I amnot sure if I am asking the question properly.
if I sell the property in 2013, financing it over a 20 year period with 15000 down, do I pay taxes on the difference at once in 2014 or on the money down and what I get each year? is there an advantage tax wise to getting the total sale amount as opposed to getting the money monthly over a period of time.
You will pay tax on the amount that the sales price exceeds the basis, but you recognize it as you get paid
This is known as the installment method.
A simplified example would be if you sold the property and had a $30,000 gain, and that was spread over 10 years - you would recognize $3,000 a year
It's a little complex area in tax, so I would invest in a local professional to handle your return
I could walk you through the numbers better if you knew your cost basis
You will also have interest income from the note you carry for the buyer. That will be taxed as ordinary income.
thank you for your help. this is extremely new to me. Per your example, taxes would be paid on 3000.00 a year?
I have a better idea than I did before. I can ask better questions when entering into negotiations. i can look for info I did not know I needed. thanks.
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You can read more about installment sales, HERE.