Capital Gains taxes on selling your home
Are you trying to figure out what capital gains taxes you would need to pay to sell your house?
The basis for calculating capital gains taxes on your home is calculated using your home’s selling price, minus deductible closing costs, selling costs, and your tax basis in the property. Your tax basis for the property is the original purchase price, plus purchase expenses, plus the cost of capital improvements, minus any depreciation and minus any casualty losses or insurance payments.
Any expenses needed for selling your house allows your taxable gain to be lower as you capitalize (add back) those expenses to your original purchase price to figure out taxable gain on your property.
There is a primary residence exclusion that a homeowner can qualify for which allows the taxpayer
To qualify for the $250,000/$500,000 primary residence exclusion from capital gains taxes on your residence, you must own and occupy the home as your principal residence for at least two years before you sell it. It should be noted that there are a few exclusions to this rule.
There is also like-kind exchange 1031 tax-free exchange to avoid capital gains if you are going to buy another property within the allotted time to identify and acquire the new property.
Here are some guidelines to figure out your capital gains tax rate on selling your home:
If you owe taxes, the amount you will pay depends on your tax bracket. If you’re in the 10% to 15% tax bracket, your capital gains tax rate is zero. If you’re in the 25% to 35% tax bracket, your capital gains tax rate is 15%. If you’re in the 39.6% tax bracket, your capital gains tax rate is 20%.