Capital gain tax on selling real estate in 1 year

[Nicole Parnell]

What is the % of taxes I may be subject to pay on a property I lived in for 366 days then sell at a profit? I'm getting mixed responses on this. A real estate agent told me 25% of the gain. A lady on biggerpockets forum told me 15%.

[Michael Plaks]

@Nicole Parnell

You may be worrying about the wrong thing. Taxes are important, but what is more important is your exit strategy for this property, your business plan and your overall financial plan, including handling your personal debt. 

As far as taxes, the answer depends on too many missing pieces, which is why the guesses you received (25% and 15%) are not very helpful. Your profit will likely (but not necessarily) be taxed as a capital gain. If you hold it for 366 days like you mentioned - then it's long-term capital gain rate, however it's not one rate. It can be anywhere from 0% to 24%. 

You might even qualify for an exclusion, depending on the circumstances. And there could be some ways to plan ahead and minimize or even remove the tax. This is not for an online post, this takes a consultation with a tax pro.

And, like @Steve Vaughan mentioned, the amount of gain subject to tax could be smaller than you expect, and consequently the tax you are facing could be smaller or even zero.

Once again: your plan is more important than your taxes. I would not try to hack it with a little bit of online research. Get professional help, because in this case it could be very well worth it.