Capital Gains

here is a link for the cap gain calculator. Save it and use it. Hope it helps.

http://www.moneychimp.com/features/capgain.htm

Considerations

Net capital gains and losses are fully part of adjusted gross income (AGI), with the exception that if your net capital loss exceeds $3,000, you can only take $3,000 of the loss in a tax year and must carry the remainder forward ($1,500 if you are married filing separately). If you die with carried-over losses, they are lost. Short-term and long-term loss carryovers retain their short or long-term character when they are carried over.

This discussion is about the various tax rates on capital gains. It is important to note that these rates are only the nominal rates. Because capital gains are a part of AGI, if your AGI is such that you are subject to phaseouts and floors on your itemized deductions, personal exemptions, and other deductions and credits, your actual marginal tax rate on the gains will exceed the nominal tax rate.

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Short-term gains

Short-term gains are taxed as ordinary income. Therefore, the nominal tax rate will be whatever tax bracket you are in. See "What the TaxMan Really Gets?" for more information on nominal tax rates.
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Long-term gains

Long-term gains are somewhat more complicated. The majority of people now only have two rates to worry about - 5% and 15%. Your long-term gains are taxed at 5% (0% in 2008) if you are in the 10% or 15% bracket overall and 15% if you are in any other bracket. The long-term gains are included when figuring out what bracket you're in. However, the 5%/15% rate doesn't apply to all long-term gains. Long-term gains on collectibles, some types of restricted stock, and certain other assets are instead subject to a minimum 28%. Another word of caution: these rate are only 'temporary,' being scheduled to revert to the 'old' 20% and 10% rates that had been in place before 2003 tax legislation removed them.

Figuring your best tax strategy for capital gains and losses in 2003 is made especially difficult because of "transition rules." These special rules are unique to 2003 and are the result of the capital gains rate being changed in midstream - net capital gains before May 6, 2003 are generally taxed at 20% and those after May 5, 2003 at 10%. Losses, both short and long-term, must match gains properly, however. Also thrown into the equation is qualified dividend income, which is retroactive to tax years beginning in 2003, is taxed as net capital gain at the 15% rate.

Still another complication in long-term taxation arrived January 1, 2001, and further complicates 2003 computations. As of that date, lower rates came into effect for gains having a holding period of over 60 months (called the "ultra-long-term rate" here). The rates are 8% if you are in the 15% bracket, 18% otherwise. As of 5/6/2003, this rule was repealed until 2009.

There are also more considerations. If it's a PR then 250K (500K for couples) is tax free (Federal at least).

And if it's a rental then you have depreciation recapture which is not at the cap gains rate. I believe it's at 25%.

PR = Primary Residence

Thanks, D

Thanks Anita, you are a big help
jrgnsn

capital gains: are basically the TAXES that you pay on like FLIPS and BIG DEALS right? SULLY.

Do u have info about Ca State Cap gain rate?
Jrgnsn

here is a good link for you to check your state

http://demo.assetstream.com/calculator/Help/State_tax_rates.htm

yes. any profit made.

Once you get rolling you want to take advantage of the 1031 exchange plan.

Any Real Estate property owner or investor of Real Estate, should consider an exchange when he/she expects to acquire a replacement "like kind" property subsequent to the sale of his existing investment property. Anything otherwise would necessitate the payment of a capital gain tax, which can exceed 20-30%, depending on the federal and state tax rates of your given state. To make it easy to understand, when purchasing a replacement property (without the benefit of a 1031 exchange) your buying power is reduced to the point, that it only represents 70-80% of what it did previously (before the exchange and payment of taxes)

you can find plenty of info if you google 1031 exchange.
Zeek

My father bought a home in 1959 for $41K. When he died in 1991 my mothers' new base was $300K. At that time she decided to "give" it to her 3 children ina house GRIT. We owned it after 7 years, but the base remained the same. She died in 2004. We got a loan for $1250000, split the money and bought real estate. The loan was an alligator and went to $1350000. We want to sell but aren't sure if we have enough for the cap gain. What do u think?
New FMV is $1600000. There's one recent comp.

jrgnsn

Thanks again anita. Now I can quit worrying about this. My tax account was no help the lawyer seems to always be on vacation. I need new everybodys. Jrgnsn

is worth 1.6 mil now? Is there any thing owed on it. There are ways around cap gains.

only cap gains (profits) are taxed!!!!

That's a great idea, but my brother,sister and I don't want to have RE together anymore, and we are holding it in an LLC as a rental, so we'd have to 1031 it into another something together or wait to sell it (2 yrs I think) after we put it back into our individual names.
We are trying to lease option it to our rentor. We're asking $100K option consideration and $10K /mo. He's thinking about it.
jrgnsn

How do I find out the secret?
Jrgnsn

your PM

Had no idea where to post this question so i figured here is as good a place as any. Does anyone know how to make your own business cards. I may sound stupid but still pretty new to the computer. I used to use it just to play poker lol. Not kidding

CHECK OUT WWW.VISTA.COM, YOUR HERO, SULLY.

http://www.google.com/search?hl=en&q=business+cards

I used overnightPrints. It was easier to design my card online than the other sites.

Just wanted to say that the Cap Gains (Federal) for 2008 is 0%.

jrgnsn

I've found that vistaprint.com makes decent ones, and they frequently run reduced prices or "free." Office Depot has gobs of choices, too, very reasonable in price, if you want one-on-one help putting the card together

talking about your own residence or investment houses? Cause all gains on primary res. after two years is 0%...

Long term Federal Cap Gains for a pr for the 10-15% bracket is 0% in 2008.. see Anita's reply on 5/20/08 above concerning this. Sorry it took so long to reply.. I've been in Washington way too long with sketchy internet access.
jrgnsn

I still feel like this is a big gray area. I've never understood capital gains tax. Some facts/myths I have heard are..

You dont pay capital gains if you owned it for 2+ years

You pay more if its 1 year or less than if you owned it 1 - 2 years.

You only pay the tax based on the "profit" you made. But what is the "profit"? Do you get to figure in the $40k you spent on rehab? Is it Sold price minus your purchase price? Or do you just make up a number?

You dont pay it if you roll it over... or purchase another investment with your "profit" you made.

The capital gains tax rules are different depending on state.

Are any of these true? Can anyone explain? Im worried I will make $10k of in-my-pocket profit and have to pay $20k in tax.