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Now that we know the tax laws, is it better to sell our

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Now that we know...

Now that we know the tax laws, is it better to sell our primary home in California now in 2017 or later in 2018? We know about the exemptions but we are still having a large capital gain, how are the tax comparing? Our buyer wants to wait for 2018 but we have a feeling that for us sellers its not going to be for our best interest

Submitted: 7 months ago.Category: Tax
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12/7/2017
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,442
Experience: Certified Public Accountant
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Hi my name is Mark. I will be happy to help you with your questions. Please give me a moment to prepare your response.

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Customer reply replied 7 months ago
okay, thanks
Customer reply replied 7 months ago
just mail please no calls..
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

How long have you lived in the home? Please ignore the phone call solicitations. These are coming from the web site and not me.

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Customer reply replied 7 months ago
26 years
Customer reply replied 7 months ago
i know about the 250k per spouse as well of the improvements and closing fees exemptions, and of course taking the basis price purchase of the house 26 years ago...What I need to know is what are the differences with the present taxes and the one for 2018, and how they are affecting us as sellers in California with a long term capital gain
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Currently, you are able to exclude a gain up to $500,000 if you are married ($250,000 if single) if you lived in the home for 2 out of the past 5 years. The current bill that has not passed discusses changing the 2 year requirement to 5 out of 8 years. I am not seeing where capital gains rates are being changed.

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Customer reply replied 7 months ago
how about the deductions or exemptions etc, will i still be able to deduct the improvements? Is long term capital gain calculated with the income bracket systems? Or is it calculated differently without looking into someone income brackets the previous years?
Customer reply replied 7 months ago
Could you actually calculate a projection for me if I give you the numbers?
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Yes, the improvements would be added to the basis of your property. The standard deduction is supposed to double to around $25K.

Long-Term capital gains are taxed at a preferred rate. The rate is between 0-20%. In most cases it is 15%. If you are in the 0-15% brackets the rate is 0%. If you are in the 39.6% bracket the rate is 20%.

Yes, I could give you a projection. What do you expect the gain will be on the home? Approximately how much is your other income?

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Customer reply replied 7 months ago
We have no other incomes(my daughter and myself kid of retired). We are selling our home for 5.3. we paid 1.3. The closing cost 20k. The improvements 200k. the exemptions are 250k each.
Customer reply replied 7 months ago
50/50% with my daughter.
Customer reply replied 7 months ago
Oh, I don't see my previous mail about the numbers, did you get it?
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Yes I did. What are the $250K exemptions?

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Customer reply replied 7 months ago
we are joint owners, these are our exemptions
Customer reply replied 7 months ago
our gain is big...we owned the house 26 years
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Congratulations. I am almost finished. The $250,000 is the gain that is excluded. Please give me a few moments.

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Customer reply replied 7 months ago
500k for both of us
Customer reply replied 7 months ago
California tax and federal tax
Customer reply replied 7 months ago
alternative minimum tax? is it still there in 2018?
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Ok, I calculated a gain of $3.8 and $1.9 individually. Assuming the $250K is exclude you would have a capital gain of $1.65. The tax on this would be just under $304K Federal and $190K from California. Almost $500K combined. This is based on the current rules.

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Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

AMT was about $1260 and is not going to go away. It is too big of a revenue generator for the government.

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Customer reply replied 7 months ago
thank you, ***** ***** be the difference in 2018? Basically I am trying to see if selling in 2018 is more or less advantageous for us. We had a closing date on the 28th of December but now the buyer wants it to be January 2018 and we have to make that decision today..
Customer reply replied 7 months ago
I am confused,did you calculate 500k owned jointly or just 250k?
Customer reply replied 7 months ago
no more confused, I get it
Customer reply replied 7 months ago
ohhhh! I forgot the agents commission:( 4 %
Customer reply replied 7 months ago
At the end, all I need to know is with the future maybe tax laws, is it better for us to sell this year or next year, or does it make a difference?
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

I split the gain in half and assumed that you and your daughter were filing as being single is this correct?

There is not much difference in the plans for next year. The house plan 12% bracket ends at 45K and the Senate plan ends at $38,700. The current bracket (15%) ends at $37,950 So you would be looking at about a $1,400 savings if the house plan is accepted and about $200.

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Customer reply replied 7 months ago
I understand no big differences between 2017 and 2018 for us sellers as long as they don't come up with an unexpected tax reform.
Customer reply replied 7 months ago
I forgot to deduct the agent fees of 4% on the 5.3 sale..
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

After the commission $285K Federal and $176K State.

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Customer reply replied 7 months ago
461K for my daughter total taxes and the same for myself.
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

That if you are both filing single. If you get married you can increase the exclusion to $500,000 and lower the capital gain tax :)

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Customer reply replied 7 months ago
what is the gain before taxes for each one?
Customer reply replied 7 months ago
I don't understand, the exclusion is not only for married people but is also for people who own an asset jointly no?
Customer reply replied 7 months ago
it is 250k for my daughter who owns the house jointly with me
Customer reply replied 7 months ago
250k for myself 500k total
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Yes. it is available for your situation. Both you and your daughter would be eligible for the $250K Exclusion.

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Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

The gain is $1.544. (1.8 less 250K less $106K commission)

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Customer reply replied 7 months ago
can we go back to the calculations of our gains etc? It should be giving me more details, please
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Sure. Not a problem.

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Customer reply replied 7 months ago
sale:5.3
-commission 4%
-basis: 1.3
-improvments 200k
-closing fees 20k
- exemptions 500k
Customer reply replied 7 months ago
is it possible to recalculate as if we were married, its less confusing....Sorry I am French and old
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

No I can calculate the combined gain.

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Customer reply replied 7 months ago
line by line if possible, thank you:)
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Sales Price $5, 300

Commission $212,

Basis $1,300

Improvements 200

Closing Fees 20

Gain = $3,568

50% gain to each $1,784

Less $250K Exclusion

Net Gain $1,534

I did not take into account the closing costs above.

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Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

If this answered your question I would appreciate if you would take a moment to rate my response. There should be stars located above the question. This is the only way that I will receive credit for helping you today. If you have additional questions or need clarification I would be happy to continue the conversation.

Thank you.

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Customer reply replied 7 months ago
thank you, ***** *****! i am on the phone since!
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

It was my pleasure. I was happy to help.

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Customer reply replied 7 months ago
1534 is the gain x2 = 3068 for both of us.
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

$3,068 would be the combined gain.

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Customer reply replied 7 months ago
thank you, ***** ***** the phone...
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

No worries.

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Customer reply replied 7 months ago
Thank you Mark, I think I got my answers, it doesn't make much differences to us to sell this year or next year. I appreciate your help.
Best regards,
V
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Good luck with everything. Happy holidays! If you could provide a rating I would greatly appreciate it.

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Customer reply replied 7 months ago
I will 10 stars
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 7 months ago

Thank you.

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Customer reply replied 7 months ago
Hi I have another question.. in 2018 will the 13.3 state tax be a deduction from the fed tax with our capital gain? Or is it not how it is calculated with capital gain?
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