Capital Gains Form?
I am going to settlement for a property to be sold next week. I should be getting a check for 53K, but I had expenses in lieu of @ 16k. My Tax guy mentioned to me yesterday that I should ask for an expense type form at settlement. That way I can take out that 16K from the total so that I am not taxed on the whole kit and kabootal.
Two Questions:
What's the name of that form?
Exactly what percentage to I need to expect to be charged next year on capital gains?
Thanks.
If this is your primary residence, which you have owned and occupied for two of the past five years, then your tax liability will be zero.
If this is an investment property which you have owned at least one year, then your maximum long term capital gains tax will be 15% of your profit from appreciation and 25% of your gain from depreciation.
If this is an investment property which you have owned less than one year, then your short term capital gains tax rate is the same as your ordinary income tax rate.
If this is a flip property, then your profit is taxed as ordinary income at your ordinary income tax rate AND your self-employment tax rate is 15.3%.
Other than the HUD-1 which you will receive at settlement, there is no other expense form or sheet that the settlement company will give you. If you have expenses which were paid outside of the settlement, then your own records will have to document your expenses.