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What is capital gains tax rate for sale of home: My mom is

selling her home and has...
What is capital gains tax rate for sale of home: My mom is selling her home and has zero income. She is on social security.
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: purchased house for $22,000 in 1969. Sale is approx. $1,200,000.
JA: Is there anything else important you think the Accountant should know?
Customer: Location: Cupertino, CA USA
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Answered in 5 minutes by:
3/25/2017
Richard
Richard, Tax Attorney
Category: Finance
Satisfied Customers: 55,874
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Hi! My name is Richard & I will be helping you today! It will take me a few minutes to type a response to your question. Thanks for your patience!

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Customer reply replied 8 months ago
Ok.

Good afternoon. Can you provide me a bit more information? Is your father alive? If not, did he and your mom own the home before he died? If so, what was the value of the home when your dad died? Thanks.

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Customer reply replied 8 months ago
Father died in 1989. They both owned the home before he died. Value of the home was probably $250,000.

Thank you. In that case, when he died the basis would have been increased at that time to $250,000. And, if any improvements have been made since then, you can also include the cost of those improvements in the basis to reduce the gain. In California, the marginal tax rate goes up to 13.3% and you get a credit for the state taxes on the Federal return. On the Federal level, the tax laws concerning taxation of long term capital gains are as follows:

0% applies to long-term gains and dividend income if a person is in the 10% and 15% tax brackets (including the capital gain),
15% applies to long-term gains and dividend income if a person is in the 25%, 28%, 33%, or 35% tax brackets, and
20% applies to long-term gains and dividend income if a person is in the 39.6% tax bracket.

In addition, starting in 2013, capital gain income became subject to an additional 3.8% Medicare tax for taxpayers with income at or above a certain threshold. This 3.8% Medicare surtax applies to taxpayers with “net investment income” in excess of threshold income amounts of $200,000 for single filers and $250,000 for married couples filing jointly.

Thank you so much for allowing me to help you with your question. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as Good or Excellent (i.e., 4 or 5 stars)(hopefully Excellent/5 stars!). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

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Customer reply replied 8 months ago
she has zero income. would her rate be 0%. or does she count the capital gain as 'income' and is taxed in that bracket?

Thanks for following up. She needs to include the gain in her income to determine the marginal rate unfortunately.

This is the part of my job I don't like...when the law is not in favor of my customer. But, I can only provide you information based on the law so that you can act on the best available information to you. ………..I wish I had better news, but can only hope you recognize and understand my predicament and don't shoot the messenger. I'm sorry!

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Customer reply replied 8 months ago
Got it. Just trying to clarify. Not shooting anyone. lol!

Thank you for your understanding. :)

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Customer reply replied 8 months ago
Thank you.

You're very welcome. It's been my honor and privilege to help you with this. If I can help you in any way in the future, I'll be happy to help. For easy access, my bookmark is: www.justanswer.com/law/expert-legalbeacon/ . Or, simply request “Richard only” in the first line of your question.

Richard
Richard, Tax Attorney
Category: Finance
Satisfied Customers: 55,874
Experience: 29 years of experience as a tax, real estate, and business attorney.
Verified
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Richard
Richard, Tax Attorney
Category: Finance
Satisfied Customers: 55,874
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Experience: 29 years of experience as a tax, real estate, and business attorney.

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