Capital Gains Tax Explained #capitalgain #homesale

12 Apr 2023 · 1 min

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In this concise instructional video, the presenter explains what capital gains tax is and how it applies to the sale of a home. He defines capital gains tax as a tax on profit from asset sales, noting that the rate depends on the seller’s income and holding period. The video walks through calculating the capital gain on a home by subtracting the adjusted basis (original purchase price plus capital improvements minus depreciation or other deductions) from the sale price. It then outlines the home‑sale exclusion, stating that owners who lived in the home for at least two of the last five years can exclude up to $250,000 of gain (or $500,000 for married couples filing jointly). The presenter ends with a call to action to visit his profile and subscribe to his newsletter.

Chapters

If you want to know what capital gains tax is, listen up. Capital gains tax is a tax on the profit earned from the sale of an asset. The actual tax rate that is applied is based on your income and the amount of time you held the asset. If you're selling your home and you want to figure out the capital gain, you have to figure out the difference between the price you're selling the home for and your adjusted basis in the home. Your adjusted basis in the home would be the original price you bought it for, plus any capital improvements you've made in the home, minus any depreciation or other deductions you've taken. If the price you're selling the home for is greater than your adjusted basis, then you may have a capital gain. But hold on, you may qualify for the home sale exclusion, which means that you could exclude some of that capital gain. If you've lived in the home for at least 2 of the past 5 years, you can exclude up to $250,000 of gain if you're an individual and up to $500,000 if you're a couple, if you're married and filing jointly. You want to learn more things like this? Go to my profile page here and click on that link, then subscribe to my newsletter.