I just sold my very small modest rental home and received 130000.00. Do I have to save 20 percent of the above for taxes next year. I purchased the home many years ago for only 34000.00 Please advise.
If it was a rental home, then yes, any gain from the sale of your home will be taxed at the capital gain rate of 20%. To the extent you claimed depreciation, part of that gain may be taxed at your ordinary income tax rates, which may be higher than 20%. However, your basis will not just include the purchase price, but also the costs of any improvements you’ve made to your home. In addition, some of the closing costs, such as realtor fees, would increase your basis further.
– Law Office of Kunal Patel, LLC