estimated tax payment after sale of primary home?

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gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

estimated tax payment after sale of primary home?

Post by gips » Wed Sep 12, 2018 12:47 pm

Hi,

My single sil just sold her primary residence and had a $400k long term cap gain. Her earned income is about $20k will she have to pay gap gain tax? if so is it 15% of (400k-250k) = $22.5k If that's correct, should she make an estimated payment?

tia!

shans2000
Posts: 5
Joined: Thu Aug 30, 2018 3:16 pm

Re: estimated tax payment after sale of primary home?

Post by shans2000 » Wed Sep 12, 2018 12:51 pm

If they have lived in the home for 2yrs out of the last 5 yrs, the gains are tax free.

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: estimated tax payment after sale of primary home?

Post by gips » Wed Sep 12, 2018 1:29 pm

thanks, why is that?

HereToLearn
Posts: 200
Joined: Sat Mar 17, 2018 5:53 pm

Re: estimated tax payment after sale of primary home?

Post by HereToLearn » Wed Sep 12, 2018 1:37 pm

shans2000 wrote:
Wed Sep 12, 2018 12:51 pm
If they have lived in the home for 2yrs out of the last 5 yrs, the gains are tax free.
AFAIK, the residency rule is for capturing the $250K exemption.

@gips---I assume that your sister has included the costs of any capital improvements? And I think the real estate commission may be added to the basis also, but am not certain.

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: estimated tax payment after sale of primary home?

Post by gips » Wed Sep 12, 2018 1:53 pm

thanks, yes, it's $400k net.

curmudgeon
Posts: 1631
Joined: Thu Jun 20, 2013 11:00 pm

Re: estimated tax payment after sale of primary home?

Post by curmudgeon » Wed Sep 12, 2018 3:35 pm

$150K would be taxable long term capital gain. The net tax due won't be quite 15% x $150K, however, because it will interact with other aspects of her tax return. I'm guessing more like $18K. It would be worth running her numbers through a tax estimator like https://www.mortgagecalculator.org/calc ... ulator.php

If her income and taxes have been otherwise steady the past few years, she might fall under one of the "safe harbor" clauses which would mean she doesn't need to send an estimated tax, but could just pay the tax when she files her return.

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: estimated tax payment after sale of primary home?

Post by gips » Wed Sep 12, 2018 3:44 pm

thanks, she stopped working in may, so I'm thinking she won't qualify for safe harbor.

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