With the housing market as crazy as it is right now, we have decided to sell 2 rental properties. My son purchased one from us as he was having a hard time finding a house in his price range that would stay on the market. We purchased that house in 2012 for 65,000 with ~12,000 down payment (loan payoff was 27,000) and have done small renovations over time but nothing major. (A few windows, new flooring, and paint) We sold it to him for 125,000. (Appraised for $140,000)
After seeing how crazy the market was and knowing we would need to pay back our healthcare subsidy because our AGI would be increasing with the sale of the first house (health subsidy ~$10,000), we decided to sell a second property that we purchased for $65,000 2.5 years ago with 14,000 down (loan payoff 42,700). (Again, no major remodel besides a simple bathroom remodel, sanded and refinished floors, and paint ~$10,000) We have 6 offers from $135-$142,000. We will be going over them this evening with our realtor. Am I correct in thinking we will owe around $25-30,000 in capital gains tax next year? (12% income tax bracket) as well as $10,000 for ACA subsidy payback? Trying to figure out what to pay IRS in estimated taxes. Or if I should put that money in a 12 month CD or money market fund until 2021 tax time. Never knew getting money could be so stressful! Thanks for any advice.
