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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13317
Experience:  15years with H & R Block. Divisional leader, Instructor
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How much taxes will I have to pay on the sale of my property

Customer Question

How much taxes will I have to pay on the sale of my property for a profit of $32,000
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.
Hello and thanks for trusting me to help you today. I am a tax adviser with over 20 years of experience.
The answer depends on many things.
First, if this is your main home and has been so for at least 2 of the last 5 years, you will not owe tax because of the main home exclusion IRC 121.
If it is not your main home then the amount you will pay depends on how long you owned the property, how much your total income is, and your filing status.
Individuals in the 10% and 15% tax brackets will pay 0% on eligible dividends and most capital gains. Individuals in the 25%, 33%, and 35% federal income tax brackets will pay 15% on capital gains, while taxpayers in the 39.6% bracket will pay 20%.
If you tell me more I can advise more specifically. Your income and the specifics I mentioned above would assist me in answering more.
Expert:  Robin D. replied 1 year ago.
Please advise if you wish me to do a more complete estimate of your tax position.
Customer: replied 1 year ago.

This home was my grandfathers and I was a remainderman in his life estate. He passed November 21, 2014. I sold the home for $65,000 on February 30, 2015. There were two of us as remandermen. We split the money in half. It was a cash sale. I make about $15,000 a year and the other remainderman (my brother) doesn't work. I have been on the deed since 2008. I have stayed in the home off and on with my grandfather. Will I have to pay taxes on this?

Expert:  Robin D. replied 1 year ago.
Staying in the home "off and on" would not be enough to claim an exclusion of gain unfortunately. It would have had to be your main home for 20 out of 5 years prior to the sale. Main home is where you spend most nights in the year. The IRS could also look to where you listed when you register to vote and your driver's lic. So if the property was not your main home the exclusion would not apply.
In a remainder man situation, you generally receive a step up in basis on the date your grandfather passed away. You actually do not own the property till they pass and then you have a basis of fair market value on that date. That would mean no gain if you sell for the same amount.
The fair market value of the property when your grandfather passed would
be very close to the same sale amount you had in Feb of 2015 (unless the area had a large land boom in prices between Nov 2014 and Feb 2015).
It appears so far that you would have no gain and no tax.
Even if you did have gain, your capital gain rate would be 0% but so far I see no gain for you when you report the sale.
Expert:  Robin D. replied 1 year ago.
Hi Mary,


I'm just following up with you to see how everything is going. Did my answer help?


Let me know,
Robin

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