What percentage will I have to pay on a short term capital gain?

Question

I am looking to flip a house and turn a net profit of up to 25000. If my taxable income before adding this short term capital gain is 50000, how do I figure out what percentage of that 25000 will be taxed?

Answer 1

You can exclude 250,000 of gain if you lived in the house as you main house and owned the house for at least 2 years anytime during the last 5 years ($500,000 if you are married and you spouce meets the lived-in part as well). You can take a part exclusion if you lived in the house for less than two years, but sold the home for reasons you could not predict (job change, sickness, etc.)

For sake of argument, let's say you can't take any exclusion. The "profit" is calculated by taking the selling price minus the costs to sell (realitor fees, advertising costs, etc.) minus the purchase price, minus the costs to buy (termite inspection, realitor fees, all the other fees, etc), minus any improvements you made to the house while you owned it. Don't subtract anything that you can normally write off (real estate taxes, points, mortgage interest). If there is a profit, you have short-term capital gains as you suspect. These are offset by any other capital losses (short or long term) that you may have incurred or rolled over from the prior year. You net, final short-term capital gain is added to your ordinary income just like any other type of ordinary income to determine your tax. If you net, final taxable income (after subtracting deductions) is $50K, and you are single, the tax rate is 25%. Once your total net taxable income goes over $74,200, it goes to 28%. Not too bad.

Answer 2

I have owned a 5 acre parcel of vacant land for 30 years. If I sell it AFTER November 1, 20115 for $350,000 how much capital gain will I have to pay? I am a senior citizen and do not pay income tax.

Answer 3

Tough! you will be taxed at a regular income tax rate. If you hold it for a year you get a tax break. But quick deals like flipping a house is meant to be a win some loose some deal.

Answer 4

You will pay at the tax rate you are in depending on your income. At the level you are indicating your tax rate would be 25% for the federal income tax. Then add on the state income tax rate.

Answer 5

Hello ...The extra $25,000 is added as regular income, similar to interest earned from a bank. So you gross income goes up and the extra income is in the 25% range (29,700-71900 +25%).