Question

Capital Gains Tax on Sale of Primary residence

Forum|Forum|2 years ago
February 7, 2024
1 reply
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I bought my first townhouse (new house) in July 2016 and lived there till July 2023, in Redmond Washington. I bought and moved to my second house in July 2023 and sold the first townhouse in August 2023 for $1.07M. The total cost of the townhouse is $591K including the upgrades down by the builder. I paid $22,892 capital gain tax to IRS in December 2023.

My questions are:

1. Is it correct to use 15% tax rates for this transaction?

2. What support do I need as the upgrades cost? Does the upgrade item menu from builder work? I don't have an invoice from builder.

3. Will Turbo tax re-calculate the capital gain tax with other income, like stock investment gain/tax, and come up with a final capital gain tax payable?

Thank you!

Ask the Experts - MetLife II - Feb 2024

R

RobertB4444

1. Long term capital gains rate is either 10 or 15% depending on your other income. 15% is a very safe estimator.

2. You need documentation of what you paid. If you don't have a receipt then the estimate and a cancelled check/credit card receipt would do.

3. TurboTax can handle this transaction just fine. But make sure as you enter the details that you are entering that this was a sale of your primary residence. Since it was your home there is a $250,000 exclusion from gain allowed ($500,000 if you are a married couple) so that should reduce your tax bill significantly. And yes, all of your capital gains get added up together in order to calculate the taxes due.

@SamSong618

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