Capital gains taxes after retirement

[Donald D Michna]

I was speaking to someone about there rental property and they mentioned that if they sell one of their rental properties after they retire or have of income of less than $33k a year that they do not have to pay capital gains on the property. I was doubtful about this but they were adamant that this was true. They stated that it was part of the new tax bill. Has anyone else heard anything about this?

[Ashish Acharya]

Originally posted by @Donald D Michna:

I was speaking to someone about there rental property and they mentioned that if they sell one of their rental properties after they retire or have of income of less than $33k a year that they do not have to pay capital gains on the property. I was doubtful about this but they were adamant that this was true. They stated that it was part of the new tax bill. Has anyone else heard anything about this?

That is true If you had just cap gain.

If your total income is less than 78k(Married) or 38 (single) and your entire 78k income is a true capital gain, then possibly there is no tax.

But if you have other ordinary income, and you have 78k capital gain on top of the ordinary income, depending on your level of ordinary income, the all or part of the gain will be taxable. 

It’s the same treatment before or after the  retirement. 

But remember when you sell rental property, there will be unrecaptured 1250 depreciation that will be taxed at ordinary rate (max 25%). So your entire capital gain might be characterized as dep recapture if you had help the property for long enough with full depreciation. 

It was similar treatment before the new law as well. What new law changed was the dependency of the capital rate on the ordinary income bracket. CG now has its own bracket. 

It gets confusing, if you actually need the tax number and planning, talking to professional might help.