Capital gains tax for a home sold in NJ

[jmt111]

What is the name of your state? NJ

I have a home in NJ that I bought for $62,000 in 2009 and that I will sell for $200,000. It is not my primary residence. $138,000 is the difference between my basis and the proposed sale amount.

What is my capital gains tax if I sell the home in NJ for $200,000?

I have $0 taxable income other than this capital gain.

Trulia.com has a capital gains tax calculator that states that my capital gains tax is $8,700 (0% on the first $80,000 and 15% on the next $58,000).

I do not know where Trulia is getting these figures from. 15% does not appear to be the federal or NJ state capital gains tax rates.

According to XXX.com, there is a 10.75% NJ state rate and a 35.75% combined federal / local / state rate. If that is the case, my capital gains tax should be $49,335. Is this figure correct?

 

[Zigner]

What is the name of your state? NJ

I have a home in NJ that I bought for $62,000 in 2009 and that I will sell for $200,000. It is not my primary residence. $138,000 is the difference between my basis and the proposed sale amount.

What is my capital gains tax if I sell the home in NJ for $200,000?

I have $0 taxable income other than this capital gain.

<xxx>.com has a capital gains tax calculator that states that my capital gains tax is $8,700 (0% on the first $80,000 and 15% on the next $58,000).

I do not know where <xxx> is getting these figures from. 15% does not appear to be the federal or NJ state capital gains tax rates.

According to <redacted>, there is a 10.75% NJ state rate and a 35.75% combined federal / local / state rate. If that is the case, my capital gains tax should be $49,335. Is this figure correct?

I've reported your posts so that the commercial links can be removed. The edited version will be returned, as appropriate.

 

[LdiJ]

What is the name of your state? NJ

I have a home in NJ that I bought for $62,000 in 2009 and that I will sell for $200,000. It is not my primary residence. I understand $138,000 is my basis.

What is my capital gain tax if I sell the home in NJ for $250,000?

I have $0 taxable income other than this capital gain.

Trulia.com has a capital gains tax calculator that states that my capital gains tax is $8,700 (0% on the first $80,000 and 15% on the next $58,000).

I do not know where Trulia is getting these figures from. 15% does not appear to be the federal or NJ state capital gains tax rates.

According to XXX.com, there is a 10.75% NJ state rate and a 35.75% combined federal / local / state rate. If that is the case, my capital gains tax should be $49,335. Is this figure correct?

If you bought the home for $62,000 why do you believe that $138,000 is your basis? Do you mean that $62,000 is your cost basis and $138,000 is your capital gain? Please keep in mind that any major improvements you made could add to your cost basis, and therefore lower your capital gain.

In order to come up with an accurate number someone would need to know more information than you are providing here. You probably want to consult a local tax professional who can both run the numbers for you and ask you the necessary questions to determine what your tax would be.

However you have misunderstood a little how the capital gains tax rates work. There are three federal rates. 0%, 15% and 20%. A combined federal/local/state rate of 35.75% is quite improbable.

I ran the numbers treating you as single and under 65 and got $12,840 for federal and $9801 for state. However, I had to pick a random county for the purposes of the software (since I did not know yours) and therefore the state could vary. That is also with the house selling at $200,000.

Using the same factors but the house selling at $250,000 I get $20,340 for federal and $13,280 for state. Your capital gain at that level is $188,000.

 

[adjusterjack]

I have a home in NJ that I bought for $62,000 in 2009 and that I will sell for $200,000. It is not my primary residence. $138,000 is the difference between my basis and the proposed sale amount.

I see that you subtracted 62k from 200k to get 138k for your gain and that's fine. But that might not be your actual gain after adjustments. When you bought the house you had acquisition costs, some of which get added to the 62k. Check your closing papers. You might have made capital improvements to the house since then. The cost of those improvements get added to your basis.

When you sell for 200k you'll have costs of sale like commissions and other items that get subtracted from the sale price.

 

[Taxing Matters]

Ok, you have said the home was not your principal residence. So what was it? Was it rented at all during the time you owned it? That's significant as that will also affect your basis.

 

[LdiJ]

Ok, you have said the home was not your principal residence. So what was it? Was it rented at all during the time you owned it? That's significant as that will also affect your basis.

True. I hadn't considered a rental, I had in my head that it was maybe a second family house down at the shore or something like that. However if it is a rental then that makes it even more important for him to consult a local tax pro.

 

[jmt111]

If you bought the home for $62,000 why do you believe that $138,000 is your basis? Do you mean that $62,000 is your cost basis and $138,000 is your capital gain? Please keep in mind that any major improvements you made could add to your cost basis, and therefore lower your capital gain.

In order to come up with an accurate number someone would need to know more information than you are providing here. You probably want to consult a local tax professional who can both run the numbers for you and ask you the necessary questions to determine what your tax would be.

However you have misunderstood a little how the capital gains tax rates work. There are three federal rates. 0%, 15% and 20%. A combined federal/local/state rate of 35.75% is quite improbable.

I ran the numbers treating you as single and under 65 and got $12,840 for federal and $9801 for state. However, I had to pick a random county for the purposes of the software (since I did not know yours) and therefore the state could vary. That is also with the house selling at $200,000.

Using the same factors but the house selling at $250,000 I get $20,340 for federal and $13,280 for state. Your capital gain at that level is $188,000.

This home is in Passaic County, NJ. Does that impact the capital gains tax?

$50,000 is my estimate for my fees for the purchase, the fees I will incur for the closing and capital improvements. I already accounted for this by reducing the sales price from $250,000 (what I am actually expecting it to sell for) to $200,000 (the difference between the $250,000 sales price and the $50,000 costs for closings and improvements).

Can you provide the capital gains tax if the home is (1) a second home and (2) a rental property?

 

[Taxing Matters]

This home is in Passaic County, NJ. Does that impact the capital gains tax?

No. The federal income tax is the same no matter where in the universe the property is located. The NJ income tax is the same regardless of where in NJ the property is located.

Can you provide the capital gains tax if the home is (1) a second home and (2) a rental property?

No. I don't have all the information here needed to do that, and I'm not going to run out computations on hypothetical situations for you. Either the property was a rental for some or all of the time you've held it or it wasn't. If it was, then depreciation will need be taken into account, and a lot more information would be needed for that. I suggest you take all the information you have regarding the property to a tax professional for help determining what the federal and state tax is that you'll end up paying on the sale.

 

[LdiJ]

No. The federal income tax is the same no matter where in the universe the property is located. The NJ income tax is the same regardless of where in NJ the property is located.

NJ appears to have county taxes and those appear to vary.

No. I don't have all the information here needed to do that, and I'm not going to run out computations on hypothetical situations for you. Either the property was a rental for some or all of the time you've held it or it wasn't. If it was, then depreciation will need be taken into account, and a lot more information would be needed for that. I suggest you take all the information you have regarding the property to a tax professional for help determining what the federal and state tax is that you'll end up paying on the sale.

Ditto

 

[Taxing Matters]

NJ appears to have county taxes and those appear to vary.

NJ has county property taxes. No NJ county has an income tax. There is one city, Newark, that taxes just earned income, not all income. It does not tax sales of property.

 

[LdiJ]

NJ has county property taxes. No NJ county has an income tax. There is one city, Newark, that taxes just earned income, not all income. It does not tax sales of property.

I will have to look at that again tomorrow, once I am in the office.

 

[davew9128]

I will have to look at that again tomorrow, once I am in the office.

Well I can confirm it right now for you. NJ isn't like OH or PA which have locality income taxes or NY where specific cities like NYC and Yonkers have income taxes.

 

[LdiJ]

Well I can confirm it right now for you. NJ isn't like OH or PA which have locality income taxes or NY where specific cities like NYC and Yonkers have income taxes.

It is interesting, because we have county income tax but we don't have to file a separate tax return for that like you have to do for Ohio. It is just built in to our state tax return. I though perhaps NJ was like that, because when I was running the numbers it required me to indentify the taxpayer's county.

 

[ShyCat]

It is interesting, because we have county income tax but we don't have to file a separate tax return for that like you have to do for Ohio. It is just built in to our state tax return. I though perhaps NJ was like that, because when I was running the numbers it required me to indentify the taxpayer's county.

The taxpayer's county is probably used to distribute some portion of the state-collected taxes to the different counties. That's how it works in my state.

 

[FlyingRon]

One other sticking point is that if you are not currently a New Jersey resident and selling a New Jersey property with a capital gain, the state wants an estimated payment at the closing.