Assistance with LT Capital Gains for a land sale please Hello,
I am about to file a form 1040-ES to pay the estimated long-term capital gains taxes that I owe from the sale of a long-term real estate investment (vacant land). The sale took place in the fourth quarter of 2015 (after Sept. 15), so the taxes are due by January 15, 2016 unless I file my 2015 form 1040 by January 31. That much I know. I would like to make sure I am understanding the rest of the process correctly.
As I understand it, the capital gains tax is calculated on the amount of the sales proceeds minus cost basis and closing costs. Example: If the land was sold for $400,000 and the cost basis and closing cost together were $70,000, then the amount from which the capital gains taxes are calculated would be $400,000 minus $70,000, which comes to $330,000. (Correct?)
Since I am in the 28% tax bracket the applicable capital gains rate for 2015 will be 15%, so $49,500 is due in capital gains taxes. (Correct?)
I am unclear, however, if I am also subject to the additional 3.8% medicare surtax? I ran the above scenario using a tax program and using my return information from 2014 (which is very close to what 2015 will be), and the amount of tax due comes closer to 18% which indicates to me that I am subject to the medicare surtax.
I would appreciate some help with the following:
1. Am I calculating the taxable proceeds correctly by subtracting cost basis and fees from the amount I received at closing and applying 15% to that amount?
2. Is the capital gains tax rate for 2015 15% for someone in the 28% tax bracket?
3. Am I subject to the 3.8% surtax?
Thanks very much for your time? |