Capital Gains Tax When You Sell a Home: Exclusion, Tax Rate, How to Calculate Your Gain, & Exemption

StellarQuest Real Estate - Lic # 02077900
Video By: Tim Hamilton
Broker Associate
Lic# 01959966
[phone]

How do capital gains taxes apply when you sell your home? In this video we talk about some of the general rules and guidelines from the IRS and Franchise Tax Board when it comes to capital gains tax.

Most people probably want to know about the primary residence exclusion. When you sell your primary residence, you are exempt from up to $250,000 of gain for a single filer, and up to $500,000 for joint filers. To qualify, the home must have been your primary residence for 2 of the last 5 years. You can only take advantage of this exclusion once every 2 years. I recommend speaking to your CPA or tax attorney to make sure you qualify.

I also show you a very simplified formula to calculate the gain or loss on the sale of your home. If you want to calculate your gain or loss please contact me. I can send you a very detailed worksheet from the IRS that shows you how to calculate your gain or loss in extreme detail. It is extremely important to speak to a tax professional or read the full set of guidelines from the IRS if you want to know how much capital gains tax you might owe.

Finally, we discuss the potential tax rate that you might pay if you owe capital gains taxes. There is a federal tax rate, California state rules, and an additional tax that may be applicable to fund Obamacare. I have detailed articles from the IRS, Franchise Tax Board, and the Washington Post that discusses the tax rates. If you want to read that information please let me know and I will send you a copy.

The information in this video is not tax advice. I highly encourage you to contact a CPA or tax attorney if you want advice for your specific situation.

Below are a few interesting charts related to housing market values.

Stocks vs. Home Values:

Home Values vs. Median Income:

Home Values vs. Inflation

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Chapters:
0:00 Capital Gains Tax
1:30 Free Home Valuation Report
1:59 Primary Residence Exclusion
3:15 Calculating Your Gain or Loss
4:47 Rates for Capital Gains
7:39 Contact Me Anytime!

[hecmacias]

Capital gains in CA are also based on income so if you check your tax bracket it will tell you the % you will pay from what I've researched. THe lowest bracket is 2% IIRC.

[johnhuo]

Do you have information about "Defer Sales Trust "? Thanks! Johj

[amrithakadungath]

What if the house is not my primary residence? Any way, I can avoid paying capital gain tax?

[chita]

I inherited a house many years ago at a base of $100.000. If I gift it to my daughter at a base now worth $500.000 and she makes it her personal home for 2 years and then sells it for $500.000 does she have to pay capital gains or is there any tax implications to either me or her?

[krispy]

If I sell my primary residence and purchase another primary residence basically rolling all that money over to the new home.... do I still pay tax?
No one talks about this....