regarding the sale of primary residence in Florida

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thekro
Posts: 109
Joined: Wed Jul 30, 2008 12:06 pm

regarding the sale of primary residence in Florida

Post by 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
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Location: Florida

Re: regarding the sale of primary residence in Florida

Post by Gill »

You are including the gain twice.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
Chardo
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Joined: Fri Feb 18, 2022 12:16 pm

Re: regarding the sale of primary residence in Florida

Post by Chardo »

Just to be clear, you're talking about federal taxes. Florida has no tax.
muffins14
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Location: New York

Re: regarding the sale of primary residence in Florida

Post by muffins14 »

thekro wrote: Tue Jan 24, 2023 6:19 am
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
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Beachey
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Re: regarding the sale of primary residence in Florida

Post by 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
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Re: regarding the sale of primary residence in Florida

Post by 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
Last edited by Silk McCue on Tue Jan 24, 2023 10:52 am, edited 1 time in total.
tortoise84
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Joined: Thu Nov 19, 2020 10:03 pm

Re: regarding the sale of primary residence in Florida

Post by tortoise84 »

Also, there is a 20% long-term capital gains tax bracket over $553,850 for MFJ.
Topic Author
thekro
Posts: 109
Joined: Wed Jul 30, 2008 12:06 pm

Re: regarding the sale of primary residence in Florida

Post by thekro »

muffins14 wrote: Tue Jan 24, 2023 6:55 am
thekro wrote: Tue Jan 24, 2023 6:19 am
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
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Re: regarding the sale of primary residence in Florida

Post by 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.
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