taxation of gain on rental property

[rmbfin]

Hello, I have a taxpayer whose only income is 23,000 in social security.  He files married filing separately.  He sold a rental property in 2023 and had a long term capital gain of 175,000.  It appears it would not be taxed as his normal income falls under the threshold of 44,625.  So is this gain tax free from taxes altogether?  Thanks unusal situation.

[rbynaker]

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@rmbfin wrote:

Hello, I have a taxpayer whose only income is 23,000 in social security.  He files married filing separately.  He sold a rental property in 2023 and had a long term capital gain of 175,000.  It appears it would not be taxed as his normal income falls under the threshold of 44,625.  So is this gain tax free from taxes altogether?  Thanks unusal situation.

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But this year the "only" income isn't just SS.  There's also a capital gain, part of which will be taxed in the 15% LTCG bracket.  See the Sch D worksheet (not sure what ProConnect calls it, might be Qualified Divs and LTCG Worksheet, I'm sure there's something somewhere detailing this calculation).  Following the crazy math on this form will teach you way more about how this works that you'll get from random strangers on the Internet. 🙂

Rick

[rmbfin]

Thanks very much Rick.