Question

2021 land sale - long term capital gains rate

Forum|Forum|4 years ago
March 14, 2022
1 reply
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I sold an investment property in 2021, owned for more than a year. I have entered the 1099-S sale (with adjustment for basis and sales costs) as Investment Income. TurboTax is calculating my capital gains rate based on my Adjusted Gross Income, not Taxable Income (per IRS guidelines). The tax difference is multiple $10K. How do I correct this?

Z

ZoltanB45

Long-term capital gains tax rate is based on taxable income. However, there is a Net Investment income Tax which is set at 3.8% and that is assessed based on the Modified Adjusted Gross Income. That might be the additional liability you are seeing. Here is a publication from the IRS site that explains the tax in great detail.