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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2319
Experience:  IRS licensed Enrolled Agent and tax instructor
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I have lived in a house 40 years i can sell it .5 million

Customer Question

i have lived in a house 40 years i can sell it for 1.5 million and i bought it for 300k
what is the best way to avoid capital gain taxes i am single i am over 65
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.
Hi. My name is ***** ***** I will be happy to help you.
If the house has been your primary residence for at least 2 out of 5 years prior the sale, which it looks like it was, you can exclude up to 250K of capital gains if your filing status is single. Assuming you did some improvements over the years plus you expenses of sale including RE commission you will still be looking at about 850k of capital gains.
Your capital gains will be difference between selling price and your basis (purchase price, major improvements, expenses of sale), minus the exclusion: 1.5m - 400K (assuming $100 for improvements and expenses of sale) - 250K = 850K
Now don't shoot the messenger here but there's no legal way to avoid paying capital gains on the difference if you sell it. Unfortunately this will put you into the highest tax bracket with 3.8% of additional Medicare tax. The house would have to pass to your beneficiaries as inheritance (eligible for step-up basis) to bypass capital gains.
I know that's not the answer you were hoping for but if there were any way to legally avoid paying capital gains I would be very happy to tell you that. Let me know if you have any questions.
Expert:  emc011075 replied 1 year ago.
I see you read my respond. Do you have any questions? Is there anything else I can help you with today?
And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.