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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10131
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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PDtax, are the capital gains tax on the total sale of the

Customer Question

PDtax, are the capital gains tax on the total sale of the house or the balance of money left over after the repurchase of the new house
Submitted: 3 months ago.
Category: Tax
Expert:  Lane replied 3 months ago.

Hi,

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Your requested expert isn't online. I can help you here

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Capital gains on the sale of a house are the same as capital gains on any OTHER capital aset.

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The only difference is that there can be an exclusion (no tax on) certain amounts of capital gain from the sale of your primary residence (250,000 for single filers, and 500,000 for thos filing as married filing a joint return).

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Capital gain = sale price - purchase price.

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Amy mortgage amounts are irrelevant (the mortgage, if the is one, is just HOW you purchased the house).

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Now, there's one more piece to this.

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If this was a rental house, the the depreciation you took (or should have taken), is subtracted from your purchase price, making the gain higher ... and that part of the gain has it's own tax rate (25%). The rest of the gain is taxed at long term capitqal gains rates if you held the house for more than a year.

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Long-term gains are taxed at

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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 3 months ago.

P.S. There IS one way that you can defer the gain into a new purchase IF this is an investment property. It'a called a 1031 exchange (after section 1031 of the internal revenue code, where this is mentioned)... you can read more about that here: https://www.irs.gov/uac/like-kind-exchanges-under-irc-code-section-1031

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

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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

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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.