[quote=AN][quote=SK in CV]Hate to quibble over a few percentage points, but on 3.5 million, 1% is a lot of money. It wont be 53%. Probably no more than high 40’s.
And more likely than not, no significant income taxes would be due until April 15th next year. There are safe harbors that would eliminate the need to pay huge quarterly estimates this year.[/quote]Based on http://www.moneychimp.com/features/tax_brackets.htm and $4M (not $3.5M since, that’s the value the house is supposed to be at), federal tax would be 38.54%. State income tax is 11.644%, based on https://webapp.ftb.ca.gov/taxcalc/calculator.aspx?Submit=2013+Tax+Calculator&Lang=english&redirectURL=OTC. So, combined, it’s ~50%. less than the ~53% I gave a rough estimated but higher than high 40’s you stated. Of course, it depends on what else you’re deducting. 3% less = $120k for $4M. Not chump change for most, but it still wouldn’t change my general point. Also, obviously, if you really were the winner, you’d get yourself a good tax advisor and not trust some vague estimate from some anonymous person on Pigg.[/quote]
That was pretty much the same as my calculation except that the state taxes are deductible. Pay 350K, about $240K of that will be deductible, saving another $100K or 2.5 to 3%. (to preempt a likely criticism, whoever wins is unlikely to be subject to alt-min tax.)
