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?
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.
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!