What if my gain exceeds the $250,000 or $500,000 exclusion limit?
You pay capital gains tax only on the amount above the excluded threshold. For example, if you are a single filer with a $600,000 gain, you exclude $250,000 and pay federal and state capital gains tax on the remaining $350,000. In NYC, the combined federal, state, and city tax on that excess could reach 30-35%. This is common for long-held NYC apartments with significant appreciation over decades of ownership.
This article provides general educational information only. It is not legal, tax, financial, insurance, compliance, housing, brokerage, or professional advice. Rules, tax rates, obligations, enforcement practices, and market conditions vary by property, building, contract, municipality, and jurisdiction, and they change. Sellers should consult a qualified attorney, CPA, or other appropriate professional before making decisions based on their specific situation.
From the seller playbook: IRC §121 Primary Residence Exclusion
This is general information, not legal, tax or accounting advice. Every situation is different. Talk to a licensed attorney, accountant or tax professional before you act.
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