How to calculate capital gain tax payable on a home when sold at a price much hi

  1. skgrao profile image72
    skgraoposted 7 years ago

    How to calculate capital gain tax payable on a home when sold at a price much higher than what...

    was paid when it was purchased.

  2. davidseeger profile image61
    davidseegerposted 7 years ago

    A taxpayer can exclude up to $250,000 of the gain on the sale of the taxpayer's main home if all of the following are true:

    The ownership test is met. (owned the property for 2 of the last 5 years.)
    The use test is met. (used the home as the primary residence for 2 of last 5 years)
    During the 2-year period ending on the date of the sale, the taxpayer did not exclude gain from the sale of another home.

    A taxpayer can exclude up to $500,000 of the gain on the sale of taxpayer's main home if all of the following are true.

    He is married and files a joint return for the year.
    Either the taxpayer or his spouse meets the ownership test.
    Both the taxpayer and spouse meet the use test.
    During the 2-year period ending on the date of the sale, neither the taxpayer nor the spouse excluded gain from the sale of another home.


    The gain is taxed as a long term gain. The tax is computed on the amount of the sale after deduction the $250K or $500K.

    You really should let a professional tax preparer work this out for you. There may be other considertions.

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