I'm just full of questions over the last couple of days, but appreciate your comments. I can't get a clear answer from my broker, lawyer, or accountant about capital gains. I do know that its the sale price of my apartment, less the brokers fee, less $ 250,000.00 (as a single person), less capital improvements, and I think the original price of my apartment. Is that correct? After what is left,... [more]
I'm just full of questions over the last couple of days, but appreciate your comments.
I can't get a clear answer from my broker, lawyer, or accountant about capital gains.
I do know that its the sale price of my apartment, less the brokers fee, less $ 250,000.00 (as a single person), less capital improvements, and I think the original price of my apartment. Is that correct?
After what is left, what is the formula to figure out what I will be taxed on and what amount. I understand it is due IRS by April 15th the year that I close.
I have heard so many different things from many people on this subject and don't know why it's a mystery item for many, but if I need to pay out $ 25G,. vs.. $ 75G I would like to know this up front.
I sure could use your guidance with this.
Thanks again.
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Response by maly
over 15 years ago
Posts: 1377
Member since: Jan 2009
You should go to the IRS website for exact and comprehensive answers.
In general, if you are single, have owned your home for at least 2 years, and lived there for at least 2 of the last 5 years, you have an exemption of $250,000. To calculate your capital gains, you need to know the cost basis (if you bought it yourself, pretty much what you paid, plus your buying costs, plus any capital improvements), to deduct from your net (sale price minus selling expenses.)
Assuming your capital gains are above $250,000, you owe 15% of the amount above the exemption. You will need to make an estimated tax payment by the end of the quarter (not April 15 of the prior year, how could you know in advance?)
So, say you bought a place in 2001 for 500k, paid 25k in closing costs and 75k remodeling, your cost basis is 600K. You sold it for $1M in November 2010 and paid 60k to your broker, you netted 940K. Your capital gains are 340K. Since it was your primary residence, you get a $250K exemption. By the end of December, you need to give 340-250= 110*15%= $16,500.
Of course, that's the simple version, the IRS has all the worksheets to make all the proper adjustments.
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Response by maly
over 15 years ago
Posts: 1377
Member since: Jan 2009
Ack, math is hard. 340-250= 90k*15%= $13,500.
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Response by damier212
over 15 years ago
Posts: 124
Member since: Aug 2009
Thank you so much maly for your explanation....it was the first time it was EVER spelled out to me so clearly!
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Response by columbiacounty
over 15 years ago
Posts: 12708
Member since: Jan 2009
don't forget the bite that the city and state and will take as well. also, your share of any building wide assessments for capital improvements raises your basis price.
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Response by 007
over 15 years ago
Posts: 195
Member since: Nov 2008
also if you have losses in stock market or have stocks that you wish to get rid off at a loss, sell now and reduce the capital gains.
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Response by apt23
over 15 years ago
Posts: 2041
Member since: Jul 2009
yes. i held onto all my dot com losses for years and dumped them all when i sold my apt. it certainly took the sting out of the loss.
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Response by Sunday
over 15 years ago
Posts: 1607
Member since: Sep 2009
Once you hit AMT, long term capital gains get taxed at 25% instead of 15% right?
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Response by Sunday
over 15 years ago
Posts: 1607
Member since: Sep 2009
Ok, a friend just told me it's not 25%, but it could effectively be up to around 22% depending on the tax payer. Bottom line is, it could be greater than 15%. Time to get a good tax accountant I guess.
You should go to the IRS website for exact and comprehensive answers.
In general, if you are single, have owned your home for at least 2 years, and lived there for at least 2 of the last 5 years, you have an exemption of $250,000. To calculate your capital gains, you need to know the cost basis (if you bought it yourself, pretty much what you paid, plus your buying costs, plus any capital improvements), to deduct from your net (sale price minus selling expenses.)
Assuming your capital gains are above $250,000, you owe 15% of the amount above the exemption. You will need to make an estimated tax payment by the end of the quarter (not April 15 of the prior year, how could you know in advance?)
So, say you bought a place in 2001 for 500k, paid 25k in closing costs and 75k remodeling, your cost basis is 600K. You sold it for $1M in November 2010 and paid 60k to your broker, you netted 940K. Your capital gains are 340K. Since it was your primary residence, you get a $250K exemption. By the end of December, you need to give 340-250= 110*15%= $16,500.
Of course, that's the simple version, the IRS has all the worksheets to make all the proper adjustments.
Ack, math is hard. 340-250= 90k*15%= $13,500.
Thank you so much maly for your explanation....it was the first time it was EVER spelled out to me so clearly!
don't forget the bite that the city and state and will take as well. also, your share of any building wide assessments for capital improvements raises your basis price.
also if you have losses in stock market or have stocks that you wish to get rid off at a loss, sell now and reduce the capital gains.
yes. i held onto all my dot com losses for years and dumped them all when i sold my apt. it certainly took the sting out of the loss.
Once you hit AMT, long term capital gains get taxed at 25% instead of 15% right?
Ok, a friend just told me it's not 25%, but it could effectively be up to around 22% depending on the tax payer. Bottom line is, it could be greater than 15%. Time to get a good tax accountant I guess.