What Is Capital Gains Tax?
Did you know that, as a property owner, you are expected to pay a percentage of the profit that you earn when you sell your investment? This is what is known as capital gains tax. Capital gains tax is the tax levied on the profits from the sale of investments, if the investment was held for at least a period of one year before being sold. The taxable percentage differs from person to person, as it is calculated based off your taxable income of the year.
Did you know that there is a very high change you are exempt for paying capital taxes? It’s all thanks to something the government did, called Taxpayer Relief Act 1997. This was one of, if not the largest tax reduction law passed by the US government. This act offered relief to college students, parents, small business owners and others new to the investment world through different benefits. This is what an overview of these exemptions looks like to different population categories:
The IRS offers an exemption on the first 250,000 for those who are single and 500,000 for those who are married and are filing taxes jointly. One thing to remember though is that, when it comes to homes, this rule is applicable only towards the primary residence of the owner and can only be allowed once every two years.
According to recent reports by investment advisory companies, “Short-term capital gains are taxed as ordinary income, with rates as high as 37% for high-income earners; long-term capital gains tax rates are 0%, 15%, 20%, or 28%, with rates applied according to income and tax filing status.”
How does the IRS determine which home is your primary residence? It’s quite straightforward – you should’ve lived in that house for at least 2 years over the past 5 years. This means that out of 1825 days, you should’ve stayed at this particular property for 730 days or more. This best thing about this is that these 2 years don’t have to be consecutive!
Filing Status | 0% Tax Rate | 15% Tax Rate | 20% Tax Rate |
---|---|---|---|
Single | < $41,675 | $41,675 to $459,750 | > $459,750 |
Married filing jointly | < $83,350 | $83,350 to $517,200 | > $517,200 |
Married filing separately | < $41,675 | $41,675 to $258,600 | > $258,600 |
Head of household | < $55,800 | $55,800 to $488,500 | > $488,500 |
Applicable to the Sale of a Principal Residence
Another tip for you to be exempt from paying capital gains taxes is to reinvest the proceeds into another property though a 1031 Exchange.
Don’t wait! Start investing in profitable real estate ventures with the help of TC Global and their team of highly qualified brokers and advisors.
Why Texas is the Future of Office Spaces: Key Insights from Houston, Dallas, and San Antonio
Real Estate Articles / Oct 18, 2024
Texas\' Thriving Office Market: Exploring Growth and Investment Opportunities in Houston, Dallas, and San Antonio
Wealth management tips. How to create wealth?
Real Estate Articles / Jun 08, 2022
We have listed the best ways through which you can make money in a low risk manner. Create wealth using these investment options. It is the easiest way to get rich.
Navigating the Future of Real Estate: Trends in Houston and Beyond
Real Estate Articles / Apr 01, 2024
Exploring Real Estate Trends in Houston: Embracing Online Innovations and Smart Home Features
How is crypto and blockchain changing real estate business and money making?
Real Estate Articles / Oct 14, 2022
Cryptocurrency and blockchain technology is changing the real estate business in many ways. Real estate investing has started shifting to a digital and virtual space slowly.
Houston excels in the latest ranking of top U.S. cities for working-class families
Real Estate Articles / Dec 29, 2023
Houston-The-Woodlands-Sugar Land Secures 30th Spot in National Economic Prosperity Rankings, Revealing Robust Growth Amidst Population Surge and Varied Socioeconomic Challenges
How you can profit from investing in Texas wetlands
Real Estate Articles / Dec 21, 2022
Wetlands are profitable investments if done right. Texas has multiple real estate investment options, including wetlands and you can get great returns on investment from them.
Stocks Or Real Estate? Which Is The Better Investment?
Real Estate Articles / Feb 09, 2022
Want to invest and make money? We have listed out the pros and cons of the real estate market and the stock market so that you can decide if you want to invest in stocks or real estate.
Navigating the Changing Tides of Net Lease Investments
Real Estate Articles / Jul 01, 2024
Net lease property market adjusts to rising interest rates: Sales volume down, cap rates up. Financing challenges stymie development and acquisitions.
Short term rentals are declining but you can still make money with the right kind of investment
Real Estate Articles / Jul 26, 2023
There are still opportunities to earn money from short-term rentals, despite the ongoing decline. strategic investments and a proactive approach can lead to success in the evolving short-term rental industry.
Navigating the Future of Real Estate: Trends in Houston and Beyond
Real Estate Articles / Jul 19, 2024
the real estate landscape is rapidly evolving, with online homebuying, smart home integration, and virtual interior design becoming increasingly prevalent.