Legal Question in Real Estate Law in California
capital gains tax on property less than two years
I am selling my home in less than the two year time period that makes it exempt from capital gains. I have heard many different theories and explanations of the new laws and none seem to match up. I am wondering if the home is sold in less than two years (it would be 14 months when it closes) is the tax pro rated against that 2 year exemption, meaning, if i had it 12 months and the tax was 15 percent, would my real rate prorate to 7 and a half percent because of holding the property one year. Also, does the 100,000 dollars of added capital gains push me into a new tax bracket. i currently make 60,000 dollars. thanks.
2 Answers from Attorneys
Re: capital gains tax on property less than two years
If you are buying a new principal residence of equal or greater value, it will not matter since you can defer your gain into the new house by having your tax basis carried forward into the new house. Otherwise the capital gain will be taxed at about 20% (15% federal and 5% state)This should not affect you tax on your ordinary income.
Re: capital gains tax on property less than two years
It is not prorated unless the reason for the sale is that you are moving to take a new job or if you are moving for health reasons. Other than that, you must stay there for 2 years.
Capital gains is taxed at the rate of 15% currently.
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