Author Topic: Avoiding all capital gains on primary home sale with low MAGI?  (Read 1337 times)

Comenius

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Avoiding all capital gains on primary home sale with low MAGI?
« on: January 03, 2017, 10:28:29 AM »
I'm considering selling my home this year. I've been living in it for nearly 20 years and it has appreciated considerably since I purchased it. My filing status is single.

Am I reading the tax rules correctly that so long as my MAGI is under $37,5000 in 2017 that I would pay $0 in capital gains taxes on the transaction, even with a rather large ($500K+) profit?

terran

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Re: Avoiding all capital gains on primary home sale with low MAGI?
« Reply #1 on: January 03, 2017, 10:44:33 AM »
No, you pay a 0% capital gains rate for income that falls under the 15% earned income tax bracket. The capital gains count as income though, so only the gains that fall under that income limit after accounting for your regular income.

BUT, there is an exclusion for the first $250k single / $500k married of gains from the sale of real estate that was your primary residence for at least 2 of the last 5 years. I'm not sure how this would interact with the 0% capital gains rate for gains above that.

Do you have records of what you've paid for repairs and improvements on the home over the years? Those would help reduce the gains.

Comenius

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Re: Avoiding all capital gains on primary home sale with low MAGI?
« Reply #2 on: January 04, 2017, 08:44:56 AM »
Ah yes, of course, that makes perfect sense. Thank you!