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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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I am on social security and in a low tax bracket. I sold my

Customer Question

I am on social security and in a low tax bracket. I sold my rental property this year 2008, and I believe I will pay low taxes and low cap gains. Correct? Next question : I also want to sell my residence. Is it better to sell it this year or in 2009? I get confusing information re what is happening with tax rates next year, and also have to consider that selling 2 houses this year could really put me in a high tax bracket.
Submitted: 8 years ago.
Category: Tax
Expert:  Lev replied 8 years ago.

If you are selling your primary residence and you owned and used it as a primary residence at least two out of last five years before the sale - the capital gain is excluded from your taxable income - up to $250,000 for singles and $500,000 for married coupled filing joint returns.


Selling the rental property is taxable event. If you owned the property more than a year - the gain will be taxed as long term gain at lower rates - not more than 15%.

The part of the gain that otherwise would be taxes at 15% or below will not be taxed in 2008 and 2009. The part that otherwise would be taxed at 25% or higher - will be taxed at 15%.

In additional - you would be required to recapture the depreciation depending on how long did you rent the property - that amount will be taxed as your regular income.


Please be advised that additional taxable income will push your adjusted gross income up - and as a side effect - your social security income will be partly taxable.


The Congress is discussing the option to increase tax rates - but there was no any decision this matter yet.

Please let me know if you need any clarification or need help to estimate your tax liability.

Lev and other Tax Specialists are ready to help you
Customer: replied 8 years ago.
thank you

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