Have a Tax Question? Ask a Tax Expert
There are some issues to consider... - if that house was inherited OR gifted to you? That is important to determine your basis... - have you used the house as your primary residence? That is important to verify if you qualify for the exclusion? - was the house used as a business or rental [property?I will help you to determine expected tax liability.
The first step - to determine the basis...
If the property was inherited - the basis is the fair market value at the time the decedent passed away.If the property was purchased - the basis is the purchase price.The basis is adjusted by some items - for instance - improvements will increase the basis.Then - we need to calculate the gain which is equals to (selling price) MINUS (adjusted basis) MINUS (selling expenses - Realtor fees, etc)
That gain is added to other taxable income - but generally is taxed at reduced rates assuming the property was owned more than a year. Long term capital gain rates are 15% for most taxpayers - but for high income - it might be 20% and for low income 5%.If the property was used as a primary residence at least two years within last five years before the sale - - up to $250k (for a single seller) may be excluded from taxable income.
NY state income tax rates also depend on total income - between 4% and 8.82%and finally NYC tax rates are between 2.907% and 3.876%.
Separately from income tax - there is NY transfer tax on real estate sales. Tax is computed at a rate of two dollars for each $500, or fractional part thereof, of consideration. An additional real estate transfer tax (sometimes referred to as the "mansion tax") of 1% of the sale price applies to residences where consideration is $1 million or more.
Let me know if you need help to estimate your expected tax liability.