• Ask an Expert
• Get a Professional Answer
• 100% Satisfaction Guarantee
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10872
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
1929974
Type Your Tax Question Here...
Lane is online now

# Is profit on sale of 2 nd home taxed at 15 percent Cash paid

### Customer Question

Is profit on sale of 2 nd home taxed at 15 percent
Cash paid for 2 nd home in 1985, value of \$66,000 paid, be increased by current inflation value of dollar, roughly 50 percent. Say \$90,000. In other words, can the inflated value of the dollar be used in calculating the profit on the sale.
Submitted: 6 months ago.
Category: Tax
Expert:  Lane replied 6 months ago.

Hi. My name's Lane. I can help you with this.

...

First, so sorry, yes there is no capital gain exclusion on a 2nd home as their is on your primary residence.

...

And the tax on the gain (the profit, if you will) is based on your TOTAL household taxable income for the year of the sale.

...

Long-term gains are taxed at

• 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

...

The formula for calculating capital gain is as follows:

...

Capital Gain = Sales price - tax basis

...

And tax basis is what you purchased the property for PLUS any improvements PLUS any selling costs, such as real estate commissions

...

SO here (without adding any improvements or sales commissions, which will raise basis, hence lower the amount of the gain) your gain would be 90,000 - 66,000 = 24000

...

And if this is your ONLY income, there would be zero tax, as 24000 is under the 25% ORDINARY bracket (hence the 0% capital gains bracket) for both married filing jointly and single.

Expert:  Lane replied 6 months ago.

Here's a chart that shows how the cappital gains tax is dependent upon the ordinary income tax brackets

Expert:  Lane replied 6 months ago.

. … Please let me know if you have any questions at all, before rating me

...

If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

Otherwise I’m working for no crediting at all here

...

Thank you!

Lane

I hold a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.