capital gains or hold

A realtor recently suggested that flipping properties at up to 38% taxes was not recommended, rather buy, rent and hold the property for 5 years and then sell to avoid capital gains...does this strategy really avoid taxes?

Comments(2)

  • DaveT5th June, 2003

    Until Tuesday, May 27, holding for five years earned you the lowest capital gains tax rate on the books (8%, or 18% depending upon your tax bracket).

    On Wednesday, May 28, the Jobs And Growth Tax Relief Reconciliation Act of 2003 was signed, and for awhile, the rules will even permit a ZERO captial gains tax rate during a very short window.

    ONLY for transactions on or after May 6, 2003 through December 31, 2007, the maximum capital gains tax rate will be 15%. For those in the 15% tax bracket, the maximum capital gains rate will be 5%.

    In 2008, the 15% capital gains rate remains in effect, but the 5% rate goes to ZERO for this year only.

    On January 1, 2009, the old 20% and 10% rates return.

  • tlsargent5th June, 2003

    Thank you so much for your quick response...it was a far more complex question that I had anticipated. I appreciate you sharing your knowledge! WOW!

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