regarding the sale of primary residence in Florida

[thekro]

simple example
i file my taxes jointly, yearly combined income is 100k for purpose of this discussion

we bought our house 40 years ago at 100k
in florida you can take 500k deduction on capital gains

the house can now be sold for 1.6 million
our cost basis is 100k
500k deduction so capital gain is 1 million (long term capital gain)
after we pay the capital gains tax if its 15% we are left with $850,000

is that $850,000 added to our normal income of 100k which would bring our total to $950,000 for the year taxed again in our new income
for the year? like would we lose another 1/3 of it?

Thank you very much everyone who can help answer this question

in addition I read that there Medicare Surtax on Capital Gains Income
There may be additional taxes on investment income or lost tax deductions for people with higher incomes. For example, married taxpayers with incomes of more than $250,000 will also be required to pay an additional 3.8% net-investment surtax.

[Gill]

You are including the gain twice.
Gill

[Chardo]

Just to be clear, you're talking about federal taxes. Florida has no tax.

[muffins14]

is that $850,000 added to our normal income of 100k which would bring our total to $950,000 for the year taxed again in our new income
for the year? like would we lose another 1/3 of it?

There may be additional taxes on investment income or lost tax deductions for people with higher incomes. For example, married taxpayers with incomes of more than $250,000 will also be required to pay an additional 3.8% net-investment surtax.

No, you are only taxed on the gain, it is not taxed multiple times, only once. Have you been told otherwise?

You will likely need to pay 3.8% tax on the difference between your AGI and 250k if married, so I assume 3.8% of (1,000,000 + 100,000 - 250,000) = 32,300 in tax

[Beachey]

It might not get you to 1.6 million but you have made no capital improvements in 40 years? Roof? Landscaping? New Driveway? Remodel?

[Silk McCue]

For tax purposes the basis of the house can be increased based upon
capital improvements and other factors which will reduce capital gains taxes due.

https://www.irs.gov/faqs/capital-gains- ... home-etc-3

Cheers

[tortoise84]

Also, there is a 20% long-term capital gains tax bracket over $553,850 for MFJ.

[thekro]

is that $850,000 added to our normal income of 100k which would bring our total to $950,000 for the year taxed again in our new income
for the year? like would we lose another 1/3 of it?

There may be additional taxes on investment income or lost tax deductions for people with higher incomes. For example, married taxpayers with incomes of more than $250,000 will also be required to pay an additional 3.8% net-investment surtax.

No, you are only taxed on the gain, it is not taxed multiple times, only once. Have you been told otherwise?

You will likely need to pay 3.8% tax on the difference between your AGI and 250k if married, so I assume 3.8% of (1,000,000 + 100,000 - 250,000) = 32,300 in tax

I have not been told otherwise, thank you for your reply, I am just trying gather as much information as possible so we are not in for any surprises

[SuzBanyan]

If you are on Medicare, your Medicare costs will likely go up for 1 year due to IRMAA. If you sell in 2023, you will see an increase in 2025.