Level 4

Solved

What is capital gains rate on the sale of home

Forum|Forum|6 years ago
June 4, 2020
16 replies
54 views

I have a client with no taxable income (her taxable social security and pension combined are less than her standard deduction). However, she sold a home for $1,400,000 that she purchased in 1973 with a cost basis of less than $100,000. With her exclusion her capital gain on the sale is close to $1,000,000.

Does she have to pay capital gains tax on this transaction?

KMACK

ProSeries Professional

This topic has been closed for replies.

Best answer by sjrcpa

Maximum rate is 20%. Work thru the Sch D tax worksheet to get the exact amount.

sjrcpaAnswer

Level 15

Maximum rate is 20%. Work thru the Sch D tax worksheet to get the exact amount.

The more I know the more I don’t know.

K

KMACKAuthor

Level 4

Ok. I thought the rate might be lower or zero if she had no taxable income.

abctax55

Level 15

It IS lower... depending on all other income. 20% is the MAX on just the gain; the other income can be pushed into a higher bracket due to such a large gain. As Susan said, you should spend a bit of time running thru the Sch D worksheet of the computation of the tax.

HumanKind... Be Both

abctax55

Level 15

Yes. And the rate isn't any 'different' than the rate on any other LTCG.

Can I assume you've asked about improvements over that time line?

HumanKind... Be Both

K

KMACKAuthor

Level 4

Is the rate lower if the client otherwise has not taxable income?

abctax55

Level 15

Same house you've been asking about the last few days?

https://proconnect.intuit.com/community/proseries-discussions/discussion/re-inherited-home-form-1041/01/87697#M48803

HumanKind... Be Both

K

KMACKAuthor

Level 4

Different house.

Accountant-Man

Level 13

<<Does she have to pay capital gains tax on this transaction?>>

Why wouldn't she pay tax? She made over $1MM in gain. You do know the maximum exclusion, right?

Her federal taxes on the gain would be part zero, part 15%, part 20%.

** I am "Elevating with Intention!"

K

KMACKAuthor

Level 4

Okay. So some of the gain would be at the lower rate.

itonewbie

Level 15

Agree with Susan and Anna.

If there was depreciation taken on or after May 7, 1997, there'd be unrecaptured §1250 subject to a max of 25%.

Given the property was purchased back in 1973, she may also have §1250 recapture, subject to tax as ordinary income, if depreciation was taken in excess of straight line.

---------------------------------------------------------------------------------Still an AllStar

dkh

Level 15

Why not just enter the information into the tax return and see what the outcome is?

Sign up

Login with SSO

Let's get you signed in

Login with SSO