How Much is Capital Gains Tax on a Property in Lakewood?
If you sell a home in Lakewood or Long Beach, you could be subject to capital gains tax period but how much could you have to pay?
Please note you should always seek advice from a certified tax attorney or financial advisor. The following is for general information only.
What is Capital Gains Tax?
Capital gains tax is a tax that the government requires you to pay when you sell something for a profit. There are two types of capital gains tax: short term and long term.
Short term capital gains tax comes into play if you sell your home in one year or less. Long term capital gains tax is only an issue if you've held your home for more than a year.
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How Much Can You Expect to Pay in Capital Gains?
Different capital gains tax rates. Statistically, most single people have to pay a 15% capital gains rate; a smaller portion will fall into the 20% long term capital gains rate. Here’s the breakdown:
- Your tax rate is 0 percent on long-term capital gains if you’re a single filer who earns less than $40,400 per year, you’re married filing jointly and you earn less than $80,800, or you’re a head of household who earns less than $54,100.
- Your tax rate is 15 percent on long-term capital gains if you’re a single filer who earns more than $40,401 per year, you’re married filing jointly and you earn more than $80,801, or you’re a head of household who earns between $54,101 and $473,750.
- Your tax rate is 20 percent on long-term capital gains if you’re a single filer who earns more than $445,851 per year, you’re married filing jointly and you earn more than $501,601, or you’re a head of household who earns more than $473,751.
Is There a Primary Residence Tax Exemption?
The Internal Revenue Service gives everyone a $250,000 tax free exemption on capital gains from a primary residence. However, you should talk to a financial professional if you think that the primary residence tax exemption will affect you. The requirements for the primary residence tax exemption are as follows:
- The home must be your primary residence
- You must have owned the home for at least two years
- You must have lived in the home for at least two of the last five years
- You must not have taken this exclusion in the past two years
Related: How to improve your credit score so you can apply for a mortgage
Are You Buying or Selling a Home in Lakewood?
If you’re not already living in Lakewood, or if you are but you’re looking for a new home, we’re here to help. Call us right now at 562-882-1581 or start browsing our Lakewood real estate listings to find your dream home today!
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