Anonymous wrote:Under current law, if you live in the house for three of the last five years of ownership, as a married couple, the first 500k in capital gains is tax free. After that, you will pay whatever the long term capital gains rate is at the time you sell, currently 15%.

and a 20% CG rate for if income is over $450K for married.

Under current law, if you live in the house for three of the last five years of ownership, as a married couple, the first 500k in capital gains is tax free. After that, you will pay whatever the long term capital gains rate is at the time you sell, currently 15%.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You would be taxed at long-term capital gains rate for the amount you make (difference between purchase and sales price) above and beyond the $250K per person exclusion assuming you have continued to live there.

http://www.irs.gov/taxtopics/tc701.html

You don't need to "protect the money". Taxes pay for schools, hospitals etc. If you are making a couple of million you can afford a few hundred thousand in taxes.

issue is after exemption, let's say there is 1M in play. Are we taxed at personal income bracket (40% roughly) which is 400K or capital gains rate (15%??) much different scenarios.

Who knows what tax laws will be like in 10 years? If you really want to count your potential real estate gains in your retirement figures I would be super conservative. I don't think I'd count more than half that equity to account for rising tax rates and unforeseen costs.

That's the key point. The housing market, interest rates, tax laws, etc. are all volatile. I'd count the money, but do four scenarios, starting with worst-case (no equity at all) and ending with sale for current (conservatively estimated) value, with two in between. Any increase in value is great, but is just gravy and shouldn't be counted on.

Anonymous wrote:

Anonymous wrote:You would be taxed at long-term capital gains rate for the amount you make (difference between purchase and sales price) above and beyond the $250K per person exclusion assuming you have continued to live there.

http://www.irs.gov/taxtopics/tc701.html

You don't need to "protect the money". Taxes pay for schools, hospitals etc. If you are making a couple of million you can afford a few hundred thousand in taxes.

issue is after exemption, let's say there is 1M in play. Are we taxed at personal income bracket (40% roughly) which is 400K or capital gains rate (15%??) much different scenarios.

why don't you re-read the post you quoted, or check the link the PP helpfully provided?

Keep track of improvements you've made to the house (ie new windows) that can be added to the purchase price.

Anonymous wrote:

Anonymous wrote:You would be taxed at long-term capital gains rate for the amount you make (difference between purchase and sales price) above and beyond the $250K per person exclusion assuming you have continued to live there.

http://www.irs.gov/taxtopics/tc701.html

You don't need to "protect the money". Taxes pay for schools, hospitals etc. If you are making a couple of million you can afford a few hundred thousand in taxes.

issue is after exemption, let's say there is 1M in play. Are we taxed at personal income bracket (40% roughly) which is 400K or capital gains rate (15%??) much different scenarios.

Who knows what tax laws will be like in 10 years? If you really want to count your potential real estate gains in your retirement figures I would be super conservative. I don't think I'd count more than half that equity to account for rising tax rates and unforeseen costs.

Anonymous wrote:You would be taxed at long-term capital gains rate for the amount you make (difference between purchase and sales price) above and beyond the $250K per person exclusion assuming you have continued to live there.

http://www.irs.gov/taxtopics/tc701.html

You don't need to "protect the money". Taxes pay for schools, hospitals etc. If you are making a couple of million you can afford a few hundred thousand in taxes.

issue is after exemption, let's say there is 1M in play. Are we taxed at personal income bracket (40% roughly) which is 400K or capital gains rate (15%??) much different scenarios.

Got it-- I think most of us, no matter what tax bracket, are disinclined to give more than we have to. I certainly have and continue to pay a lot of taxes. But yes, I get the earn more pay more "blessing"

You would be taxed at long-term capital gains rate for the amount you make (difference between purchase and sales price) above and beyond the $250K per person exclusion assuming you have continued to live there.

http://www.irs.gov/taxtopics/tc701.html

You don't need to "protect the money". Taxes pay for schools, hospitals etc. If you are making a couple of million you can afford a few hundred thousand in taxes.

We live in a much larger home than we will want at retirement. Let's say it's a 2M home today and will be paid off in 10 years, but we are 20 years away from retirement. We plan to sell in about 10 years and downsize. I assume house might be worth more in 10 years, so let's say 2.4M, and we would buy the about a 1M place. We can "count" that 1.4 m for retirement, correct? And do we get taxed (at 40% current rate) for what we would take out of the sale? How could we protect that money better?