If you sell property next year, you could be paying a lot more in taxes unless Congress resolves the looming "taxmageddon", when the Bush-era tax cuts expire and a new surtax is imposed on higher-income individuals.
Next year, the capital gains tax will increase to 20 percent from 15 percent. A lower rate of 18 percent will apply to properties purchased after Dec. 31, 2000, and held for at least five years.
For those in the higher-income brackets ($125,000 for married filing separate, $200,000 for single filers, $250,000 for married filing jointly), a Medicare surtax of 3.8 percent will also be applied to the taxable gains on investments, including sales of a principal residence. Single people can exclude $250,000 of the gain from a principal residence from taxes; married couples can exclude $500,000.
Vacation homes are not eligible for the tax exclusion, so if you sell next year, you'll owe capital gains tax on the entire profit.
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