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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10890
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have been living in my house years and now want to sell

Customer Question

I have been living in my house for 30 years and now want to sell it. I have owned one house before and reinvested all its capital gains in my current home. what will be the capital gains tax on my current home after sale?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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I hold a JD (Juris Doctorate, a doctoral degree in the law), concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from Mercer University's Stetson School of Business and Economics, as well as CFP and CRPS designations.

I can help here

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IRC section 121 changed the rules on primary residence gains back in 2008. (you no longer have to roll that gain into a new home)

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Now, $250,000 (500,000 for those married filing jointly) of your capital gain on sale is completely excluded from your taxable income, as long as you lived in the home as your primary residence in any 24 months prior to the sale.

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Capital gain = Sales price minus basis

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Basis is your original purchase price plus improvements.

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And if you DO have gain over and above the exclusion amount capital gains are taxed here at the lower long term capital gain rates:

  • 0% if taxable income falls in the 10% or 15% marginal tax brackets
  • 15% if taxable income falls in the 25%, 28%, 33%, or 35% marginal tax brackets
  • 20% if taxable income falls in the 39.6% marginal tax bracket

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Please let me know what questions you may have from here

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Lane

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