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capital gain on primary residence

jvarnercpa
Level 2

After the $500,000 exclusion, my client has a long-term gain on the sale of their home greater than $400,000.  I thought that the capital gain tax rate would be calculated based on all of their other income which is less than $80,000.  Apparently I was wrong?

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rbynaker
Level 13

It works similar to regular income tax but with different rates and brackets.  Follow the Sch D worksheet and you'll see the portion taxed at 0%, 15%, etc.

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5 Comments 5
rbynaker
Level 13

It works similar to regular income tax but with different rates and brackets.  Follow the Sch D worksheet and you'll see the portion taxed at 0%, 15%, etc.

jvarnercpa
Level 2

Thank you for answering so quickly.  I can move on and give the client the bad news.

rbynaker
Level 13

You mean something like "Congratulations on the huge gain on your property!  Out of the $900K profit you only have to pay ~$60K in federal income taxes."

BobKamman
Level 15

Are they also paying NIIT on Form 8960?  I was researching that for sale of a second home -- somehow got the impression that the rule might be different for primary residence.  But that might be just for the exclusion amount.  

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jvarnercpa
Level 2

Yes, they are.

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