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A rental property doesn’t have the same exclusions as a primary residence when it comes to capital gains taxes. You would have to pay a 25 percent depreciation recapture tax on the portion of ...
You’re not eligible for the $250,000-per-person home sale profit exclusion, and in addition to paying capital gains tax you also face a depreciation recapture tax of 25%.
Capital gains tax can also apply when you sell a rental property. Owning a rental property can help you to grow wealth long-term and diversify your income streams. Receiving regular rental income ...
Beginning in 1942, taxpayers could exclude 50% of capital gains on assets held at least six months or elect a 25% alternative tax rate if their ordinary tax rate exceeded 50%. [11] From 1954 to 1967, the maximum capital gains tax rate was 25%. [12] Capital gains tax rates were significantly increased in the 1969 and 1976 Tax Reform Acts. [11]
The remainder of any gain realized is considered long-term capital gain, provided the property was held over a year, and is taxed at a maximum rate of 15% for 2010-2012, and 20% for 2013 and thereafter. If Section 1245 or Section 1250 property is held one year or less, any gain on its sale or exchange is taxed as ordinary income.
If you sold the property for $500,000 and are a single filer, you have a capital gain of $100,000 (subtract $250,000 from the total profit of $350,000). This exclusion may apply to rental property ...
In highly appreciating markets, people may take the opportunity of selling their personal residence (where no capital gain is due below $250,000 for a single person or $500,000 for a married couple—see Taxpayer Relief Act of 1997) and moving into a former rental property for a specified time period in order to turn it into their new personal ...
Continue reading → The post Capital Gains Tax on Real Estate Investment Property appeared first on SmartAsset Blog. ... you can calculate your depreciation deduction by dividing your rental ...