Owe Capital Gains on Property Sale?

How does capital gains work when selling a house?

QUESTION: Charlene and her husband sold a rental home last year.  Do they owe capital gains and income taxes on the sale of the property?

ANSWER: Read what Norm "The Tax Man" Rollins says:

You pay capital gains and that is based on the net sales price, which is the contract price minus the closing costs.  Remember that your base has depreciated and you’re recapturing it.  If you have the property longer than one year, it’s long term capital gains and is a maximum of 15%.  If the property was purchased and sold within one year, it is ordinary income and you pay the income taxes at the capital gains rate.

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