From:  Carolyn
Date:  Mon, 19 Apr 2004

My husband and I have lived in the same home since 1973. If we sold the home, we’d have a capital gain of about $1 million. Even with the $500,000 exclusion, there still will be a lot of tax (federal and California) to pay. I’m also worried about the AMT. Can you tell us how much to reserve for taxes?

Answer

Date:  Fri, 30 Apr 2004

Hello Carolyn,

You are right to be concerned about the AMT. The California tax is not deductible for AMT, so you will be subject to that tax. You should reserve about 25% of the gain in excess of the $500,000 exclusion for income taxes.

Good luck!
Mike Gray

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