hi,
i'm evaluating whether to sell or continue renting my previous primary residence - i'm approaching the 5 year limit after which i will have to pay long term capital gains. I'm trying to figure how much the tax might be - is this the correct way to go about calculating capital gains? I will be taxed at the rate of 15%.
capital gains rate = 15 %
capital gains = rate * profit
profit = sales_price - (cost_price + fees + taxes)
cost_price = original_amount_paid + cost_of_improvements
e.g:
if i originally bought a house for $100,000 and spent $25,000 over time on repairs and improvements , my cost price would be $125,000
assume i sell for $200,000
realtor fees + excise tax approx 8% of sales price = 8 % of 200,000 which is $16,000
profit = sales_price - (cost_price + fees + taxes)
profit = 200000 - (125000 + 16000)
profit = 200000 - 141000
profit = 59000
capital gains tax = 15 % of 59 000 = $8850
Is this the correct way to go about calculating long term capital gains? Given, these numbers if the house appreciates more that $8850 over the next few years, does it make sense to keep it?
Also, i had read somewhere that there is a possible Obamacare surcharge of around 2%, does this apply to everyone or only certain tax brackets / profit.
- thanks
