Please help me in understanding long term capital gains for 10% and 15% tax bracket people (deduction, taxable)

[Gujuboy]

Let's assume i earn $36,000 per year. Now i bought a house 4 years back at $100k and now i am selling it at $500k. It is not my primary residence.

Thus, i got $400k in long term capital gains. How much tax do i owe to the US govt?

According to this calculator i owe 0 : Capital Gains Tax Rate Calculator

Is this correct or is something wrong?

Thanks for any help.

[mathjak107]

no it is not zero. you have to take the capital gains too in your calculation of taxable income and then find your bracket.. your taxable income is 436,000k less your deductions and exemptions based on your example. that would put a single in the 20% bracket and a couple in the 15%

you have to run your taxes in some tax software. although you will be taxed at 20% capital gains rate on the sale odds are at that level you will trip the amt tax.

that will tax all your other income at almost a flat rate except for a few items like mortgage interest and contributions.

it is very deceiving the way our tax sytem works as to what you will really pay when large capital gains or large deductions are involved.

[Gujuboy]

Originally Posted by mathjak107

no it is not zero. you have to take the capital gains too in your calculation of taxable income and then find your bracket.. your taxable income is 436,000k less your deductions and exemptions based on your example. that would put a single in the 20% bracket and a couple in the 15%

you have to run your taxes in some tax software. although you will be taxed at 20% capital gains rate on the sale odds are at that level you will trip the amt tax.

that will tax all your other income at almost a flat rate except for a few items like mortgage interest and contributions.

it is very deceiving the way our tax sytem works as to what you will really pay when large capital gains or large deductions are involved.

thank you...

[qdogfball]

That calculator is dead.

You would add up all of your costs to improve the home that are not expenses and add that to your 100,000 basis.

Take that difference at 20% tax rate.

Now, if it were your primary home, you can sell it for no tax!

Ten Tax Tips for Individuals Selling Their Home

If you have BOTH spouses on tax return, you can exclude up to 500,000 in capital gains tax!

[oregonwoodsmoke]

Besides capital gains, you have to recapture the depreciation you've taken.

[mathjak107]

that is assuming he was renting it out but he did not indicate that was the case.