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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10153
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am selling my home. I paid $100,000. I may get $800,000.

Customer Question

I am selling my home. I paid $100,000. I may get $800,000. What are my options to pay the taxes?
Submitted: 11 months ago.
Category: Tax
Expert:  Lane replied 11 months ago.

Hi,

First of all, if you have lived in the home for two of the last five years before the sale, under IRC Section 121 250,000 of that gain (500,000 for those married filing jointly) is excluded from I come.

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The rest of the gain is taxed at the (lower than ordinary income tax rate) long term capital gains rate.

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  • 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
Expert:  Lane replied 11 months ago.

So, let's say that you file as married filing jointly, ... You would still have 200,000 of reportable gain ... At 15% tax, you would owe $30,000 in taxes.

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If this is something that you still cannot afford to pay, then you can set up an installment payment plan online, as long as your tax debt is below $50,000, here: https://www.irs.gov/Individuals/Online-Payment-Agreement-Application

Expert:  Lane replied 11 months ago.

Hope this has helped...Let me know if you have questions.
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If this HAS helped, (and you don’t have additional questions on this), I'd really appreciate your positive rating … (by using the stars on your screen) … … That’s the only way I'll be credited a portion of what you've paid JustAnswer.
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Thank you,
Lane