Capital Gains Tax Rate
REM #F782
By Ilyce R. Glink
Summary: Capital gains taxes will be paid on the difference between the purchase price and the sales price, minus the broker's commission, transfer stamps, advertising costs, any other costs of sale and the cost of capital improvements made to the home.
Q: My aunt sold my brother and me her house for $1.00, some 8 years ago. She
is now moving out of state to a relative's house and we are planning to sell
the house. Will we have to pay capital gain tax?
A: The short answer is: Yes. You will have to pay long-term capital gains tax
on the difference between the purchase price and the sales price, minus the
broker's commission, transfer stamps, advertising costs, any other costs of
sale and the cost of capital improvements you’ve made to the home, like
a new roof or new furnace.
If your aunt had held onto the property, and lived in it for 2 of the past 5
years as her primary residence, she would have been able to keep up to $250,000
in profits tax-free. Since the property is essentially an investment property
for you and your brother, you'll have to pay long-term capital gains tax of
up to 15 percent plus state tax on the profits.
Please talk to an accountant or your tax preparer for more details.
NOTE: Ilyce R. Glink's latest ebooks are "Credit Scoring Secrets" and "How to Find a Great Real Estate Agent," which are available at her website, www.thinkglink.com.If you have questions, you can call her radio show toll-free (800-972-8255) any Sunday, from 11a-1p EST. You can also write to Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact her through her website, www.thinkglink.com © 2007 by Ilyce R. Glink. Distributed by Tribune Media Services
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