I am about to close on a real esate deal that will get me $100,000. Can anyone help me estimate about how much tax I will have to pay? Any help is greatly appericiated.
2006-09-16 19:34:34 · 10 answers · asked by saragoben 1 in Business & Finance ➔ Personal Finance
In answering your question, I am making the following assumptions.
First, this is not a principal residence that you have lived in for 24 months out of the last five years (in which case the first $250,000 of gain ($500,00 if married) is exempt from tax).
Second, that you held the real estate for more than 1 year (otherwise this would be a short-term capital gain taxable at ordinary rates).
Third, that the $100,000 is your capital gain (your capital gain can be larger than your cash out--this can happen if you previously refinance real estate being sold). Capital gain is computed as sales price less costs to sell, less the purchase price of the property plus the cost of any improvements reduced by any depreciation. The capital gain is NOT the cash out.
Fourth, that you have not taken any depreciation on the property (if you have depreciated the real property, then capital gain up to the amount of accelerated over straight line depreciation must be reported as ordinary income).
Fifth, that you are not subject to the federal AMT alternative minimum tax (if you are subject to the federal AMT, then state income taxes that you pay are not deductable in computing your federal tax.
Six, that you federal income tax rate is 28% and your state income tax rate is 6% (if either is different, then the answer below will be different).
Now for the answer. Your total tax would be $19,320 computed as follows. On a $100,000 capital gain, your federal capital gains tax would be $15,000 (15% long-term capital gains rate times $100,000) federal tax plus $6,000 state tax (6% times $100,000) less $1,680 (28% federal tax benefit of deducting your $6,000 in state taxes assuming you itemize). If you live in a state with no income tax or with a different tax rate, you can adjust the computation. There are other variables to consider not listed here. Good luck!
2006-09-16 20:14:57 · answer #1 · answered by TaxMan 3 · 1⤊ 0⤋
If you lived in the house as your primary residence for at least 2 years out of the past 5 years, your federal tax bite will be exactly $0. Your state tax liability will depend upon your state. Some states follow the federal exclusion, others don't.
If you don't qualify for the federal exclusion, the long term capital gains rate is currently 10%. If you held it for less than 1 year, it's taxed as ordinary income at your marginal rate, usually 15% or 28%.
Consult with a tax advisor for information specific to your situation. You've got $100k in hand, you can afford it.
2006-09-16 19:51:21 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 1⤋
That's an interesting question!
2016-09-20 15:58:57 · answer #3 · answered by Anonymous · 0⤊ 0⤋
how much federal tax would I have to pay on 151000
2016-12-29 14:31:44 · answer #4 · answered by Doug 1 · 0⤊ 0⤋
Great point, I'm interested to know more too
2016-08-08 15:11:19 · answer #5 · answered by Anonymous · 0⤊ 0⤋
It depends what country and state you live in. Need more info.
2006-09-17 16:50:08 · answer #6 · answered by Steve R 6 · 0⤊ 0⤋
You raise some good points here.
2016-08-23 07:00:11 · answer #7 · answered by Anonymous · 0⤊ 0⤋
cearch online for a Capital Gains tax calulator..
2006-09-16 19:41:41 · answer #8 · answered by limgrn_maria 4 · 0⤊ 2⤋
you don't have to pay tax if you don't want to. =) probably go to jail, but it's true that some people didn't file tax for 1,2,or 3 years.
2006-09-16 19:36:38 · answer #9 · answered by jv637 5 · 0⤊ 2⤋
7.75% isn't it? that would be about 13,000 so you get 87,000
2006-09-16 19:44:31 · answer #10 · answered by mypurpleelephant 5 · 0⤊ 2⤋