How much does the Government suck out from a transaction?

Question

I want to know that how much does the government charge when I sell a house out? Is there any different if I've lived there for long enough that the government doesn't consider the transaction as a investing move?

I'm living in California, so if anyone can help, it will be very kind.

Thank you very much :D

I'm living in California, so if anyone can help, it will be very kind.

Thank you very much :D

Frank Adams · Answer

In some areas local gov'ts charge a "transfer tax" or transaction fee on the sale, that's probably collected as part of the closing process. But I'm guessing you mean how much TAX do you pay on the gain, right?

Long term capital gains (gains on investments of over one year holding period) are taxed at 15%. That's on the NET GAIN. That is much lower (generally) than ORDINARY INCOME TAX which is your MARGINAL tax rate. SHORT TERM CAP GAINS (holding period of less than 12 months) is taxed the same as ordinary income.

I'm not sure what the CA LT rate is, you'd have to look at your instructions for your form 540.

If the house has been your PRIMARY RESIDENCE for 24 of the last 60 months there is no tax on up to $250K gain, if filing single, $500K gain for married filing jointly. Also you cannot have used the primary residence exemption in the past two years.

Hope this helps.

all cash