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Old 04-30-2021, 11:28 PM
 
Location: Denver, CO
2,293 posts, read 4,936,232 times
Reputation: 2553

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Is there any way to avoid paying capital gains tax on my primary residence? I understand that a gain up to $250,000 is non-taxable (single) but after that I will taxed at 15% on any additional gain. At this point, my gain is $300-$350K so $15K in taxes max (based on $600K). I hate the idea of writing a check to the government just because I made a smart real estate investment.
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Old 05-01-2021, 03:20 AM
 
88,222 posts, read 85,849,241 times
Reputation: 63586
No ..it is what it is ..the tax is the tax , however .

if when combined with all your other income you hit the higher levels your capital gain tax is not 15% , it is 23.80% Plus any state and local taxes.

If you trip the amt tax penalty like I did it is even more .

It worked out that my taxes came to 30% from dollar one ON ALL TOTAL INCOME because I had a big capital gain and hit the 23.80% level , the amt and state and local taxes.

23.80% kicks in at about 442k for a single and 496,600 for a couple . That is total income not just the gain . the capital gain is 20% plus a 3.80% surcharge plus amt penalty if applicable on all other income .

looking at our taxes for the year we sold the lease rights in 2014 , i show total income including the gain on the lease rights of 461,136.00

bottom line federal taxes were 89,387 , new york state taxes 28,604 and nyc taxes 15,021.00

133,000 in taxes . i think that is 29% plus more in amt the following year .

there was an additional amt penalty due again the following year , even though our incomes were nothing special because the large state and local taxes tripped it again on deductions this time . so that was part of the taxes too but not included in the above yet .

Last edited by mathjak107; 05-01-2021 at 04:34 AM..
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Old 05-01-2021, 03:49 AM
 
7,808 posts, read 9,865,293 times
Reputation: 14314
Well, you could get married...but that's going to cost you a LOT more!
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Old 05-01-2021, 05:30 AM
 
48 posts, read 33,743 times
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Don’t forget to include any improvements that you made to the house. This will increase your cost basis and reduce your taxable gain.
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Old 05-01-2021, 02:09 PM
 
Location: on the wind
13,942 posts, read 7,372,104 times
Reputation: 45611
Quote:
Originally Posted by Hbcapital View Post
Don’t forget to include any improvements that you made to the house. This will increase your cost basis and reduce your taxable gain.
Significant improvements, not nickel/dime stuff. That new roof could make a difference.
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Old 05-01-2021, 05:46 PM
 
Location: USA
2,445 posts, read 959,736 times
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Any capital improvements and acquisition costs will reduce your taxable gain. The "nickel and dime" costs can add up. I had bills and proof of payment for all these items. Some things that I added to my cost basis of house being sold:

1. All expenses associated with purchase. Lawyer, state and local deed registration fees, general house inspection, termite inspection, survey, etc.
2. Cost of upgraded electrical outlets.
3. Installation of can lighting.
4. Demolition of old deck and installation of new deck.
5. Installation of slate walkway.
6. Installing new gravel in driveway.
7. Cost of tree removals.
8. Bathroom retiling.
9. Awning for deck.
10. New Fence on repairs.
11. Garage door openers.
12. External lights.
13. New roof.
14. New boiler.
15. New oil storage tank.
16. New breaker box.
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Old 05-02-2021, 08:55 AM
 
Location: North Idaho
26,774 posts, read 35,891,749 times
Reputation: 56821
[quote=whoisjongalt;60945973]....... after that I will taxed at 15% on any additional gain./quote]


15%? Didn't our newly elected president just raise capital gains taxes to over 40%?
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Old 05-02-2021, 09:22 AM
 
4,301 posts, read 4,268,485 times
Reputation: 5566
Is the house an investment property or a place to live? Are you buying a new (to you) house to live in? As long as you reinvest the gain in a new house you are fine. If it was just an investment what is the difference if you made the gain on the house or a well chosen stock? Capital gains is capital gains.
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Old 05-02-2021, 09:45 AM
 
Location: Salem, OR
14,824 posts, read 36,097,247 times
Reputation: 14913
[quote=oregonwoodsmoke;60952993]
Quote:
Originally Posted by whoisjongalt View Post
....... after that I will taxed at 15% on any additional gain./quote]


15%? Didn't our newly elected president just raise capital gains taxes to over 40%?
I really dislike this fear-mongering type of stuff. Doesn't it tire you out not discussing things in context?

The context is...

Biden's proposal is to raise it that high for people making an annual income of over $1M a year. So if the OP makes that AND the Biden tax proposal passes Congress, then yes, they could expect to pay that 39.6% capital gains tax rate.

If you don't make an annual income of $1M a year, then it doesn't impact you so don't panic.

OP, as others have stated capital gains is on the basis. The basis is what you paid for it, plus commissions/closing costs, and improvements minus depreciation. If you improved the home, you might find that you are better off than you think. Most people improve their property and forget to take that into consideration when determining capital gains.
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Old 05-02-2021, 10:03 AM
 
7,808 posts, read 9,865,293 times
Reputation: 14314
[quote=oregonwoodsmoke;60952993]
Quote:
Originally Posted by whoisjongalt View Post
....... after that I will taxed at 15% on any additional gain./quote]


15%? Didn't our newly elected president just raise capital gains taxes to over 40%?
I realize that it's trendy these days to spread gross misinformation for political purposes, but it's still not very becoming.

For the record, I would be against raising the capital gains tax to 40%.
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