Hey guys - sort of long post here, but I'm trying to understand exactly how and where different components such as realtor fees, paying off mortgage, capital gains taxes come together when you sell a home. Here are the questions I have:
* Should the selling costs such as realtor fees come before calculating capital gains tax?
* How do state taxes work for California long term capital gains?
* Does paying off the remaining mortgage balance come after the entire sale?
I also included a table with hypothetical line items which reflect my current understanding of the process. Can someone help me validate this or let me know what I'm missing?
| Line Item | Price |
|---|---|
| Home Sale Price | $1,000,000 |
| Realtor Commission Fees (Assuming 6%) | -$60,000 |
| Other Selling Costs (Escrow, Attorney, etc.) | -$15,000 |
| Realized Amount | $925,000 |
| Cost Basis for Home (How much I paid the home) | $225,000 |
| Capital Gain Amount | $700,000 |
| This part is where I get confused | |
| Capital Gain Exclusion from Tax | $250,000 (Because I'm single) |
| Capital Improvements (from renovations) | $50,000 |
| Total Capital Gains subjected to Tax | $400,000 |
| Federal Tax (15% Long Term Capital Gain) | -$60,000 |
| State Tax (I'm in California) | I have no idea how state tax would work |
| Total Taxes Owed | $60,000 + state tax |
| Actual Cash from Sale | $925,000 - $60,000 - [State Tax Amount] |
| Remaining Mortgage | $50,000 |
| Final Amount | Actual Cash from Sale - Remaining Mortgage |
Submitted June 26, 2017 at 11:41PM by LeKiwi http://ift.tt/2sbmwgv
