Capital Gains Tax is levied on the profit realized from the sale of assets such as stocks, bonds, real estate, and other investments. The tax applies to the difference between the selling price and the original purchase price (basis) of the asset.
Not all capital gains are treated equally. The tax rate can vary dramatically between short term and long term gains. Short term capital gains do not benefit from any special tax rate. They are taxed at the same rate as ordinary income. Now, if you can manage to hold on to your assets for longer than a year, Now, you can benefit from a reduced tax rate on your profits. The beneficial long-term capital gains rate, those are 15% for most real property, 20% for high-income individuals, which could save them as much as 19.6% of the ordinary tax rate, This is the highest tax rate bracket of 39.6%. In other words, you have capital gains, you’re a high-income individual, you’re not going to pay 39.6% on those long-term capital gains like you will on ordinary income. You will only pay 20% taxes on long-term capital tax gain. And of course, there’s a 25% for depreciation recapture.
Homeowners who have owned and used their homes as principal residence for at least two of the five years prior to the date of sale will qualify for an exclusion of the gain from the sale of their personal residence. The maximum gain exclusion is $500,000 for married couples filing a joint return or $250,000 for singles or married couples filing separately.
Explore your investment strategies and consult a tax professional to maximize your investment returns.
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Shirin Rezania Ramos | 858.345.0685 | www.shirinramos.com | Compass, DRE 0203379
