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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13609
Experience:  15years with H & R Block. Divisional leader, Instructor
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We bought a house for $30,000 in 1978. We lived in it until

Customer Question

We bought a house for $30,000 in 1978. We lived in it until 2007, after which we began to rent it out. We have put roughly $50,000 into the house during our time of ownership. We now are thinking of selling it for $135,000. How would we estimate the capital gains tax on that sale?
Submitted: 3 years ago.
Category: Tax
Expert:  Robin D. replied 3 years ago.

Robin D :

Hello and thank you for using Just Answer,
Your capital gains will be on the difference in cost plus the improvements and then the sale price less commissions and cost of sale.
Right now that means $55,000 of gain.

Robin D :

You are also going to have to look at the recapture of depreciation. This means you will have to add back the depreciation you took over the years while renting and pay regular tax on that amount.

Robin D :

If there were any years that you were not allowed to claim all your losses that amount is used in the year of sal eot reduce the gain.

Robin D :

Your tax rate will depend on your total income.

  • 0% applies to long-term gains and dividend income if a person is in the 10% and 15% tax brackets,
  • 15% applies to long-term gains and dividend income if a person is in the 25%, 28%, 33%, or 35% tax brackets, and
  • 20% applies to long-term gains and dividend income if a person is in the 39.6% tax bracket.
Robin D :

Then there is something new that started in 2013.

Robin D :

The unearned income Medicare contribution tax is an additional tax of 3.8%. This tax is in addition to any regular income taxes. The tax is calculated by multiplying the 3.8% tax rate by the lower of the following two amounts:

Robin D :

I hope this information is helpful as you look to estimate your potential tax.

Robin D :

Respond before you rate positively if you need to ask further and thanks again.

Robin D :

Customer Last Viewed Today at 4:42

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