Capital Gains Confusion
I just bought a 3 family 2 weeks ago and have an offer to purchase already. I stand to make a 36K profit but am really unclear as to what my capital gains rate would be. I've been told that you need to hold onto the property for at least 6 months or the rate would be at 50%. I plan on using the money to help finance purchase of single family home where I would live. Any help would be appreciated
the new tax law passed in early May limits the capital gains to 15%.
You might want to contact your tax accountant...
Far from my area of expertise, but I thought that short term cap gains were 25% and long term were 15%.
Am I wrong?
Quote:I just bought a 3 family 2 weeks ago and have an offer to purchase already. I stand to make a 36K profit but am really unclear as to what my capital gains rate would be. I've been told that you need to hold onto the property for at least 6 months or the rate would be at 50%. maw,
The federal short term capital gains tax rate is the same as your ordinary income tax rate (35%, 33%, 28%, 25%, 15%, or 10%). Short term rates apply to property held less than one year. When you add your short term tax rate to your state income tax rate, I suppose you could get to a total tax hit of 50%.
For property held at least one year, the maximum federal long term capital gains tax rate is 15% through December 31, 2008 if you are in the 25% tax bracket or higher. If you happen to be in the 15% tax bracket, then your maximum long term capital gains tax rate will be 5%.
Thanks for the info. I do have a call into my accountant. As always you guys are great!!!
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