Michelle Gonzalez DRE# 01427179
RE/MAX College Park Realty
Larry Webb, Ph.D., MBA
Broker Associate/Agent – REALTOR®
Century 21 Award - Fine Homes & Estates
Orange County, California - 92867 Specialist
Video Biography: http://www.DrLarryWebb.com
See my professional recommendations on Trulia.com
CalBRE Real Estate Broker’s License: 01413405
OC Homes Realty
First off I would advise you to talk with a CPA, but the California law remained unchanged regarding the capital gains portion of your sale. There are things that will affect the amount of potential tax liability you will face. Is the home you are selling your principle residence (lived there at least 3 of the last 5 years) and are you married and file taxes jointly? The typical state and Federal taxes will apply depending on where the house is, your income, and more.
There were many new laws enacted at the beginning of the year but capital gains rates on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 for married couples.
Real briefly and there is more to consider but...
If you can claim the $500,000 exemption then you should be fine, 700,000 - 210,000 = 490,000 and there may be other expenses that can help bring your 'gains' lower (again your CPA can help).
If you can only claim the $250,000 exemption then the new capital gains tax that passed in Obama's health care bill (crazy that is even in a health care bill) then you may have an additional 3.5% tax to pay on the capital gains portion only.
If you have any other questions I am happy to get an answer and get back to you.
Good luck with your sale,
Brian Wilson, Realtor
Also, there is something called a 1031 exchange which can exempt you if you sell your property and purchase another property for a similar price. Again, consult your CPA or Tax Attorney for exact details.
Even if you're not married, ( Or no longer married.) you can deduct the first $250, 000 of your gain, and then start to look for additional deductions, such as acquisition costs, any improvement costs over the past 30 years, and any potential selling costs.
Seek a qualified tax advisor to help you find all the helpful deductions. Usually, a real estate agent, like me, is not qualified to give you such advice, so take what I've suggested with a grain of salt.
You should probably check with your CPA, but if you are married each of you can deduct $250,000 in capital gains on the sale of a principal residence. Therefore with you and your spouse you can deduct $500,000 and NOT pay any capital gains.
Joe Homs, Realtor