Tax rate on capital gains after 5yrs

Forum|Forum|3 years ago
March 24, 2023
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I understand there is a $250k/500k (single/married) exclusion and the tax rate is 15% on the profit if the second home is sold within 3yrs of moving out.

If home is sold after 3yrs of moving out, whats the tax rate on the capital gains from sale of second home 3yrs after moving out? Is it 20% on the profit?

GeorgeM777

Not sure we completely understand your question. You are correct there is a capital gain exclusion on the sale of a home provided certain requirements are met. Generally, you're not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. What this means is that you can defer capital gains on the sale of a primary residence only once every two years.

Let's assume you sold your home for a capital gain, and you don't qualify for the capital gain exclusion. The capital gain tax on that sale could be 15% or 20% depending on your filing status and taxable income. Below is the 2022 long-term capital gain rate tax table which will help you decide which capital gain tax rate applies to your sale.