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Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
You will have capital gains on $28,500
There will be no tax if you are in the 10-15% tax bracket. If you are above the 15% tax bracket you will pay 15% of this amount, and if you make over $400K per year you will pay 20% of the amount
You will report this on schedule D of your tax return
But he will not see any real gains, but only the $450 per month. Will he have to report this gain right away, and all at once?
When you say no tax, do you mean no capital gains at all? He will clearly be in lower bracket.
Yes, if you are in the 10-15% tax bracket, the long term capital gains rate is 0
so there is no gain on the sale
or no tax I mean
what about the monthly note payment? is that taxed?
The interest that he earns is not taxed
The interest that he earns is taxed
but is it considered income?
Yes, the interest is considered income.
Ok, thank you
is there anything else that I can assist you with today?
His main concern was how much capital gains and when to report
Yes, he can report on his annual tax return
Is there anything else I can assist you with tonight?
But you said he would not have capital gains if in the 10-15% bracket, right?
The capital gains tax rate at those brackets is 0%
Thank you very much!
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