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I've been all over the internet and am trying to understand the Long Term Capital Gains math. We are retirees, so have very little income. We have sold one rent house for a profit of $53,000. I do not know our income for last year (the taxes are at home and I am on vacation). But, for the sake of discussion, let's say our 2018 income was $40,000. Also, for the sake of discussion, let's leave out the improvements, repairs and depreciation - just to simplify things...

OK. We file jointly. I believe the rules are, if your income (filing jointly) is less than $78,750, you have Zero tax.

So, let's say I add the income number of $40,000 to the capital gains realized of $53,000. I would then get $93,000. Is the 15% capital gains tax on the total of the $93,000? Or the 15% capital gains on the amount OVER the $78,750? Or the amount OVER our normal income of $40,000, Or is the 15% tax now on the whole amount of $93,000? It doesn't seem right that they would tax us on the entire amount of $93K. But of course, who said the IRS is fair, right?

Can someone explain this math to me? Every place I found online, explained all the limits, and the percentage of 15%, but not on which number is the 15% applied. I suspect it will be on our total income for the year, which would be $93,000.... So, our new taxable income is $93,000 x 15%?? Thanks guys. Good thing I don't do this too much.

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