Re: Capital gains
[Re: 70 buzz]
#2795028
07/10/20 07:06 AM
07/10/20 07:06 AM
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Joined: Nov 2003
Posts: 10,228 Colleyville
3hundred
I Live Here
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I Live Here
Joined: Nov 2003
Posts: 10,228
Colleyville
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My brother and I are selling off a house and out buildings off the farm we inherited several years ago. We have rented the house out for years and ready to sell with a few non tillable acres. Anyone knows how the capital gains work? Thanks In Texas and I think everywhere you have to have lived in it as your primary residence within the last two years to avoid the CG's. I don't know about the rest of the country but in Texas it also counts if you've "homesteaded" it within the last two years. That's how it was explained to us when we sold our last house. On an inheritance I think your cost basis is the value at inheritance. If the value of money has decreased since then, you'll owe taxes on the current value or the real estate, I think.
'68 Fury Convertible '69 300 Convertible '15 Durango 5.7 Hemi '16 300 S Hemi
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Re: Capital gains
[Re: 70 buzz]
#2795248
07/10/20 06:22 PM
07/10/20 06:22 PM
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Joined: Jan 2003
Posts: 31,021 Oregon
AndyF
I Win
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I Win
Joined: Jan 2003
Posts: 31,021
Oregon
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My brother and I are selling off a house and out buildings off the farm we inherited several years ago. We have rented the house out for years and ready to sell with a few non tillable acres. Anyone knows how the capital gains work? Thanks Do you have records of everything? What the place was worth when you inherited it, what your expenses have been over the last few years, what the income has been, etc.? Have you been filing taxes all along and reporting the income from the rental? If you've been reporting the rental income and taking depreciation on the house then you should be in good shape. If you haven't been paying taxes on the rental income then you might be in trouble. Good luck. Find a tax accountant in town who handles small stuff like that and be prepared to drag along all of your records.
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Re: Capital gains
[Re: Redbird]
#2795869
07/12/20 04:21 PM
07/12/20 04:21 PM
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Joined: Feb 2015
Posts: 2,073 CA
crackedback
top fuel
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top fuel
Joined: Feb 2015
Posts: 2,073
CA
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A lot of issues here.
Rental property, potential depreciation recapture (which suck for those in any lower tax bracket) for one.
Was there a return done for closing the estate and transferring title? Is the property held in a trust? You will get stepped up basis on the property, but, there may be other considerations here. Too much to consider for a responsible answer.
You really have a situation that would warrant speaking with a seasoned estate/inheritance tax professional. I used to work as a CPA and would not rely on any answer on this board as substantive to your situation. Too many unknowns. JMHO
Last edited by crackedback; 07/12/20 04:26 PM.
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Re: Capital gains
[Re: crackedback]
#2796067
07/13/20 08:47 AM
07/13/20 08:47 AM
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Joined: Oct 2005
Posts: 8,869 Ontario, Canada
Stanton
Don't question me!
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Don't question me!
Joined: Oct 2005
Posts: 8,869
Ontario, Canada
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would not rely on any answer on this board as substantive to your situation.
Nailed it !!
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Re: Capital gains
[Re: 70 buzz]
#2796146
07/13/20 12:50 PM
07/13/20 12:50 PM
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Joined: Jan 2003
Posts: 6,018 Morningside
AdventurerSport
waaaay out there in left field
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waaaay out there in left field
Joined: Jan 2003
Posts: 6,018
Morningside
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Talk to a tax accountant, as stated. In Iowa (where I live), it applies to flipped real estate that you buy and re-sell within 24 months (last one I did I bought and then sold in the 25th month, therefore no capital gains) And, yes, the Capital Gains tax is only subject to the value that you gained in the two year period (so, if your Capital Gains is 30%, and you bought a home for $100,000 and sold it for $200,000, you would pay Capital Gains on $100,000 increase. That can be offset by improvements, though, so keep that in mind as well).
Good luck!
JS
76 Dodge Adventurer Sport Power Wagon W100 318, 727, NP203 Fulltime 4x4 Russet Red 06 Jeep Commander Ltd 4x4, 5.7L Hemi, QuadraDrive II 06 Chrysler 300C AWD 5.7L Hemi 10 Mopar 10 Challenger R/T, #483/500, 5.7L HEMI 10 Jeep Grand Cherokee Ltd 4x4 5.7L HEMI 11 Dodge Ram 1500 LoneStar Quad Cab, 5.7L HEMI, Fulltime 4x4, Deep Cherry Red 16 Jeep Cherokee Limited 3.2L Pentastar V6, 9 Speed Torqueflite, 4x4, Black
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Re: Capital gains
[Re: 70 buzz]
#2796147
07/13/20 12:55 PM
07/13/20 12:55 PM
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Joined: Jun 2005
Posts: 597 Maine
Pkeel
mopar
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mopar
Joined: Jun 2005
Posts: 597
Maine
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The value of the house on the date of inheritance is your "cost" for the house.
Assuming you reported the rental as income, then you would have also recorded depreciation on the rental property.
Then you can add in capital improvements if any. Items like a new bathroom, kitchen remodel or siding.
So at this point what you have is the following:
Cost (Value on day of death) $xx,xxx Less: Depreciation taken x,xxx
Add: Any capital improvements xxx
Adjusted Cost $xx,xxx
Sales price will be amount paid less related costs of sale. things like paint and cleaning company to prepare for sale.
Sales price $xx.xxx Less Agent fees paid x,xxx Fix up for sale costs x,xxx
Adjusted Sales Price $xx,xxx
Calculate capital gains.
Adjusted Sales Price Less Adjusted Cost will be the taxable amount. If negative no tax will be calculated.
So the rate is calculated based on your income.
Since you said you rented it for a couple of years it will be considered long term capital gains. I am guessing it is for a single taxpayer if married it is even more favorable.
If your income is below $40,000 tax rate is 0%. No tax to be paid Income for 40,001 to 441,450 15% Higher is 20%
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Re: Capital gains
[Re: 360view]
#2796895
07/15/20 11:40 AM
07/15/20 11:40 AM
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Joined: Feb 2014
Posts: 1,704 central il.
second 70
top fuel
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top fuel
Joined: Feb 2014
Posts: 1,704
central il.
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I was surprised this afternoon to find that for single filers for 2019 the first $39,375 of long term capital gains is taxed at zero.
So much was made of putting a $10,000 maximum Federal deduction for State and Local Taxes ( SALT) that the good news of being able to pay zero tax on say, buying old cars or parts, holding them more than one year, and hopefully selling them for a capital gains profit with zero tax due got lost in the “media noise.”
Before this afternoon, when I thought of avoiding Federal taxes I thought of municipal bonds.
It makes more sense now to putting in any free hours and energy into figuring out how to make up to a $40,000 one year or more Capital Gain.
Wrong Fake News that's if your total income total is under $39,375. over it's 15% up to $434,550 and 20% over that amount.
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Re: Capital gains
[Re: 70 buzz]
#2797309
07/16/20 09:55 AM
07/16/20 09:55 AM
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Joined: Jan 2003
Posts: 4,225 Bloomington, IN
HoosierTA
master
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master
Joined: Jan 2003
Posts: 4,225
Bloomington, IN
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My wife just finished out taxes, and we sold a property we had for nearly 30 years. I also bought a tractor last year, so it really helped offset the hit. Nothing like being DINK at an higher tax bracket- and hearing parents whine about some bump in expense they are having to pay for their kids school expense. Dude! I am paying to educate your kid. Go a year and not take the dependent deduction, your getting a bargain. Its actually a welfare program.
'70 Challenger R/T 383 '16 Hemi Durango SSV (work vehicle) '15 Ram Police SSV
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Re: Capital gains
[Re: second 70]
#2797461
07/16/20 02:56 PM
07/16/20 02:56 PM
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Joined: Jan 2006
Posts: 8,162 USA
360view
Moparts resident spammer
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Moparts resident spammer
Joined: Jan 2006
Posts: 8,162
USA
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I was surprised this afternoon to find that for single filers for 2019 the first $39,375 of long term capital gains is taxed at zero.
So much was made of putting a $10,000 maximum Federal deduction for State and Local Taxes ( SALT) that the good news of being able to pay zero tax on say, buying old cars or parts, holding them more than one year, and hopefully selling them for a capital gains profit with zero tax due got lost in the “media noise.”
Before this afternoon, when I thought of avoiding Federal taxes I thought of municipal bonds.
It makes more sense now to putting in any free hours and energy into figuring out how to make up to a $40,000 one year or more Capital Gain.
Wrong Fake News that's if your total income total is under $39,375. over it's 15% up to $434,550 and 20% over that amount. No. Go back and do the Qualified Dividends and Capital Gains worksheet for line 12b of form 1040. It is a bit complicated. To understand it you must do the steps including looking up values in the Tax Tables. It is 15% from $39,375 up to $434,550, then goes to 20%, and then for some can go to 28% The worksheet is on page 33 of this form 1040 guide https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
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Re: Capital gains
[Re: 360view]
#2797860
07/17/20 12:31 PM
07/17/20 12:31 PM
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Joined: Feb 2014
Posts: 1,704 central il.
second 70
top fuel
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top fuel
Joined: Feb 2014
Posts: 1,704
central il.
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I was surprised this afternoon to find that for single filers for 2019 the first $39,375 of long term capital gains is taxed at zero.
So much was made of putting a $10,000 maximum Federal deduction for State and Local Taxes ( SALT) that the good news of being able to pay zero tax on say, buying old cars or parts, holding them more than one year, and hopefully selling them for a capital gains profit with zero tax due got lost in the “media noise.”
Before this afternoon, when I thought of avoiding Federal taxes I thought of municipal bonds.
It makes more sense now to putting in any free hours and energy into figuring out how to make up to a $40,000 one year or more Capital Gain.
Wrong Fake News that's if your total income total is under $39,375. over it's 15% up to $434,550 and 20% over that amount. No. Go back and do the Qualified Dividends and Capital Gains worksheet for line 12b of form 1040. It is a bit complicated. To understand it you must do the steps including looking up values in the Tax Tables. It is 15% from $39,375 up to $434,550, then goes to 20%, and then for some can go to 28% The worksheet is on page 33 of this form 1040 guide https://www.irs.gov/pub/irs-pdf/i1040gi.pdf You're still wrong. You must pay to have your taxes done or never filed capital gains. Line 1 on worksheet is from form 1040 line 11b which is you total income. Put any number you want on line 1 of the worksheet over $39,375 and see if it isn't taxed at 15% Lol Sample If you make $35k in wages and $39k in cap gain your income would be $74k and you would pay 15% on the entire capitol gain. Now if you have 0 income and a $39k capitol gain and no other income the capitol gain would be taxed at 0 but It will be taxed as regular income because it'll be lower than the 15% cap gain tax.
Last edited by second 70; 07/17/20 04:45 PM.
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Re: Capital gains
[Re: second 70]
#2798177
07/18/20 07:01 AM
07/18/20 07:01 AM
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Joined: Jan 2006
Posts: 8,162 USA
360view
Moparts resident spammer
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Moparts resident spammer
Joined: Jan 2006
Posts: 8,162
USA
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No that is incorrect.
The first $39,375 is taxed at zero percent even if your total income is greater than $39,375.
I had a much greater than $39,375 capital gain and a much greater than $39,375 total income. I am familiar with where the 15%, 20% and 28% threshold begin.
As I posted before do the “Qualified Dividends and Capital Gains Worksheet” on page 33 by hand, step by step.
If you are using a computer program, it might be double important for you to compare the by hand way.
TurboTax, for example has had to admit to making several mistakes over the years.
I paid my first taxes when the last no-nonsense President, Dwight Eisenhower, was in office. I have seen many tax changes.
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Re: Capital gains
[Re: 360view]
#2798191
07/18/20 08:22 AM
07/18/20 08:22 AM
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Joined: Feb 2014
Posts: 1,704 central il.
second 70
top fuel
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top fuel
Joined: Feb 2014
Posts: 1,704
central il.
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No that is incorrect.
The first $39,375 is taxed at zero percent even if your total income is greater than $39,375.
I had a much greater than $39,375 capital gain and a much greater than $39,375 total income. I am familiar with where the 15%, 20% and 28% threshold begin.
As I posted before do the “Qualified Dividends and Capital Gains Worksheet” on page 33 by hand, step by step.
If you are using a computer program, it might be double important for you to compare the by hand way.
TurboTax, for example has had to admit to making several mistakes over the years.
I paid my first taxes when the last no-nonsense President, Dwight Eisenhower, was in office. I have seen many tax changes. You sir are delusional to think you get $39 K tax free. Kinda explains your thinking on your 50 plus pages of covid nonsense
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Re: Capital gains
[Re: second 70]
#2798224
07/18/20 10:32 AM
07/18/20 10:32 AM
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Joined: Jan 2006
Posts: 8,162 USA
360view
Moparts resident spammer
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Moparts resident spammer
Joined: Jan 2006
Posts: 8,162
USA
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So now I am delusional and spouting nonsense. If you cannot argue against true facts, throw slurs against the person’s character. That unfair but often used tactic is so old it has an ancient name in a now dead language: Ad Hominem The reason for my original post was to help Moparts members make a bit of extra money. I am willing to admit mistakes, and have admitted to several here on Moparts. As I have grown older my core philosophy has shifted to admitting mistakes quickly and changing course to correct them. I make an infinite number of financial mistakes every day, by not having invested yesterday in every investment that went up by today. That used to be called a “sin of omission” but today is called a “Type II error”.
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Re: Capital gains
[Re: crackedback]
#2798442
07/18/20 08:41 PM
07/18/20 08:41 PM
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Joined: Jun 2005
Posts: 597 Maine
Pkeel
mopar
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mopar
Joined: Jun 2005
Posts: 597
Maine
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I suspect trouble on this whole thing. There should probably have been K-1's issued for all the years rented as well. I do not know how they handled the shared ownership of rental property. I have seen some do it as a partnership and issue K-1's and some just have one individual report all the income and share it (Not best practice) and worse, I have seen some not report it at all. But the capital tax gains is taxed separately from regular income. It is not added to regular income and then taxed as part of regular income. https://www.nerdwallet.com/blog/taxes/capital-gains-tax-rates/This has a quick calculator to figure your capital gain taxes. Take a best guess and enter the numbers on the worksheet about halfway down the page.
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