Question

Capital Gains Taxes on Seller Agent’s portion

Forum|Forum|3 years ago
November 16, 2022
1 reply
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Using simple numbers, I bought a house for 200k, sold it for 300k, so I gained 100k. But out of that 100k profit, I paid 5k closing costs and 5k to the seller agent, so I’m left with 90k. Do I pay capital gains tax on the 100k or 90k? And what percentage will the tax be? Because I see that it ranges between 15-20%.

KochuK

Hi SamC123, thanks for attending the event and post a questions.

Based on your description, you have held the capital asset (the house) at least one year. To reply using your numbers, you pay long term capital gain tax on $90K.

In 2022, the 0% rate applies for individual taxpayers with taxable income up to $41,675 on single returns ($40,400 for 2021), $55,800 for head-of-household filers ($54,100 for 2021) and $83,350 for joint returns ($80,800 for 2021).

The 20% rate for 2022 starts at $459,751 for singles ($445,851 for 2021), $488,501 for heads of household ($473,751 for 2021) and $517,201 for couples filing jointly ($501,601 for 2021).

The 15% rate is for filers with taxable incomes between the 0% and 20% break points.

The calculation is by "Qualified Dividends and Capital Gain Tax Worksheet - line 16" on page 35 of below link.

https://www.irs.gov/pub/irs-dft/i1040gi--dft.pdf

You can see all the benchmark thresholds in the worksheet.

Hope the above helps. Thank you.

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