How Capital Gains Taxes Can Save You Money

Congratulations on selling your home in New York! This exciting milestone can also come with tax implications, particularly capital gains taxes. 

Don't worry, navigating these taxes doesn't have to be stressful. This guide will break down everything you need to know about capital gains taxes in New York as a homeowner.

What are Capital Gains Taxes?

Simply put, capital gains taxes apply to the profit you make when selling your home. In New York, capital gains are taxed at the same rate as your regular income. This means the amount you owe depends on your income tax bracket.

How Does it Apply to My Home Sale?

The good news? There's a chance you might not owe any capital gains tax at all! 

Here's why:

• The Primary Residence Exclusion: If you've lived in your home for at least two of the past five years, you can exclude up to $250,000 (if single) or $500,000 (if married filing jointly) of capital gains from taxation. This exemption significantly reduces your tax burden.

• Home Improvement Costs: The cost of improvements you've made to your home can be added to your basis (original purchase price), potentially lowering your capital gains.

What if My Profits Exceed the Exclusion?

If your profits surpass the exclusion limits, the remaining amount will be taxed as regular income. New York has a graduated income tax system, meaning the tax rate increases as your income rises. Here's a simplified breakdown of the tax brackets (tax rates may change, so consult a tax professional for the latest figures):

• Up to $8,500: 4.00%

• $8,500 to $215,400: Rates progressively increase between 4.50% and 6.85%

Additional Considerations:

• Net Investment Income Tax (NIIT): This 3.8% surcharge applies to certain investment income, including capital gains, for high-income earners.

• Federal Capital Gains Tax: Don't forget about federal capital gains taxes! These rates can be lower than New York's, depending on your income level.

Seeking Professional Help

For a more personalized assessment, consulting with a tax advisor is highly recommended. They can help you determine your specific tax situation and explore all available options to minimize your capital gains tax liability.

By understanding capital gains taxes, you can make informed decisions throughout the selling process. Knowing the potential tax implications allows you to maximize your profits and navigate this exciting chapter with confidence. 

Our agents and expert team can help you navigate the selling process. Contact us today for a free consultation today at www.rafaelchingteam.com/selling or call us at 917 727 1207