Can I Minimize Taxes When Downsizing After Selling My House for $480k?

Core Points - The article discusses the tax implications of selling a primary residence, highlighting exclusions available for capital gains based on filing status [1][4] - It emphasizes the importance of individual circumstances and tax-management strategies in determining actual tax liabilities [2][5] Capital Gains Tax Basics - Any profit from selling an investment, including a primary residence, is subject to capital gains tax, with long-term gains taxed at rates of 0%, 15%, or 20% based on income [3] - Special rules apply for primary residences, allowing exclusions of $250,000 for single filers and $500,000 for married couples filing jointly [4] Scenarios of Capital Gains Tax - Scenario One: Married couple filing jointly with a $480,000 gain can exclude the entire amount under the $500,000 exclusion, resulting in no tax owed [5] - Scenario Two: A single filer with a $480,000 gain can exclude $250,000, leading to a taxable gain of $230,000 and a tax bill of $34,500 at a 15% rate [6] - Scenario Three: If the homeowner has not lived in the residence for two of the last five years, they cannot exclude any gain and would owe $96,000 at a 20% rate on a $480,000 gain [7]