Quick! Capital Gains Tax Rate???

I would defer this to UTdave as he seems to be much more educated on this but I would believe the 15% cap gains tax would be correct.

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Originally Posted by Lloyd Christmas

So... to make this simple: Say I bought a house in 2000 for $100,000. This year I sell it for $300,000, making a profit of $200k. How much would I be taxed, assuming I'm in a normal tax bracket? Is it just the 15% cap gains tax?

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Assuming you lived in it as your principal residence 2 out of the last 5 yrs - none. If not 15% = 30,000 plus the applicable state taxes. If you are in the business of buying and flipping homes and it is not your primary residence then it could be a vastly different scenario.

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Originally Posted by Lloyd Christmas

So... to make this simple: Say I bought a house in 2000 for $100,000. This year I sell it for $300,000, making a profit of $200k. How much would I be taxed, assuming I'm in a normal tax bracket? Is it just the 15% cap gains tax?

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If it was your personal residence you would pay nothing. If it was an investment property you would pay the 15%. Plus whatever rate your state charges (5% in CO i believe)

Edit: Duh, should have clicked on page 2 ^^^

Nice. I look forward to not paying taxes in a few years.

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Originally Posted by UTdave

This other option of a one time break doesn't exist. If it's your primary residence you get the principal residence gain exlcusion if not nothing unless you want to do a 1031 (which only defers the gain & tax).

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That's my understanding as well.

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Originally Posted by Lloyd Christmas

Nice. I look forward to not paying taxes in a few years.

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Just one thing to keep in mind here...........there is a cap on the value of the house. I believe it is around 400k????

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Originally Posted by Pow4Brains

Just one thing to keep in mind here...........there is a cap on the value of the house. I believe it is around 400k????

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No, there is a cap on the tax-free PROFIT. 250K single, 500K married.

You buy it for 500K, don't do a thing to it, sell it in two years for a million, you pay zero federal tax (if you are married).

Any of y'all CPA types here in Denver? I need a new job. I'm 3 classes(1 accounting, 2 'other business') away from qualifying to sit for the CPA test w/ 3 yrs acctg experience. Looking to work for a CPA to satisfy the one year requirement for licensure. Know anyone who needs a whipping boy? PM me.

Learning taxes on a skiing website instead of visiting or calling a CPA ... priceless.

SPAM:
Should anybody want my firm to help you through these issues send me a pm.

Oh and just so everybody is clear you can use the personal residence exclusion multiple times in your life. It IS NOT limited to one time.

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Originally Posted by RootSkier

No, there is a cap on the tax-free PROFIT. 250K single, 500K married.

You buy it for 500K, don't do a thing to it, sell it in two years for a million, you pay zero federal tax (if you are married).

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Yeah, that’s what I thought too, but my neighbor’s accountant said something different. I am NOT a tax guy though, so take it for what it’s worth. I’m pretty sure we can thank the Clinton Administration for this “loop hole”:D

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Originally Posted by Pow4Brains

Yeah, that’s what I thought too, but my neighbor’s accountant said something different. I am NOT a tax guy though, so take it for what it’s worth. I’m pretty sure we can thank the Clinton Administration for this “loop hole”:D

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I wouldn't use your neighbor's accountant then. Likely, your neighbor only thought that his accountant said that. It's amazing what people hear you say sometimes. If he actually did then he is giving bad tax advice or is a dumbfuck.

OK y'all, so how does the IRS view stock options in terms of the 366 day minimum to qualify as LTCG? Do you just have to own the option for 366 days to get the 15% tax rate or do options get treated differently?

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Originally Posted by UTdave

Renovations to a house are not "deductible." They are an increase to your basis which is the number you subtract from the sales price(net of selling expenses) to come up with your gain. To the best of my knowledge there are no annual limits to this but it rarely comes up because of the size of the exclusion makes it generally irrelevent (I've only seen one case where we even needed to be concerned enough to add up the improvements to get under the exclusion).

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I used the wrong terminology when I said deductble but I would say the net effect on the capital gain would be the same when selling the house or at least that's how it was explained to me by my accountant. I was also told there was a $20,000 per year cap. I don't recall if that was due to state taxes or not. CT has weird tax laws compared to other states since they are always trying to find ways to tax the Blue Bloods who inherit much of their wealth instead of getting it in the form of income.