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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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My question is in reference to Capital Gains Tax. We have

Resolved Question:

My question is in reference to Capital Gains Tax. We have property that was gifted to my husband in 1984. The property was land only. Approximately 10 years ago, we updated the property and invested $20,000.00 in improvements and are now using the property as Rental. We have been depreciating the $20,000.00 over the years. We are now considering selling the property and would like to know how Capital Gains Tax will come into play on this property. I read that property acquired before September, 1985 is exempt from Capital Gains Tax. Please advise
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Lane :

Hi, please don't shoot the messenger here, but I think you may have seem something about the exemption of gain on pre-1985 purchase in Autralia (loys of stull out there about that on-line... but if you'll notice that all have .au at the end of the web address Here's are the capital gains rate in the US, since 1954

Lane :

What will happen here, is you will be able to add the improvements to your basis, for capital gains purposes, but you WILL have recapture on the depreciation

Lane :

I still don't see you coming into the chat here, so I'll try to give you a general answer and move us tp the "Questions and Answer" mode

Lane :

… Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)

Lane :

Generally yo will pay capital gains tax on the difference between (1) NET sales price (sales price minus commissions and other deductible closing costs) AND (2) your taxable basis, (which is original purchase price PLUS improvements)

Lane :

And on the recapture of the depreciation (you may want to use turbo-tax for this ... makes it all very easy, and it generates the schedules automatically) will be taxed at 25% (because the depreciation was taken agains ORDINARY income)

Lane :

Questions?

Lane :

You WERE showing as off-line ...Now, my screen shows you as standing by I'll wait

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4503
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

 

 


Thanks for the rating Teddy,

DO remember that the capital gains rates are based on ordinary tax levels, so that may help some.

 



Here are the rates


For a single filer

Tax rate

C.Gain rate

taxable income from $0 to $8,925,

10%

0%

taxable income over $8,925 to $36,250

15%

0%

taxable income over $36,250 to $87,850

25%

15%

on taxable income over $87,850 to $183,250

28%

15%

on taxable income over $183,250 to $398,350

33%

15%

on taxable income over $398,350 to $400,000

35%

15%

on taxable income over $400,000

39.6%

20%


For a Married filing jointly filer

Tax rate

C.Gain rate

on taxable income from $0 to $17,850

10%

0%

on taxable income over $17,850 to $72,500

15%

0%

on taxable income over $72,500 to $146,400

25%

15%

on taxable income over $146,400 to $223,050

28%

15%

on taxable income over $223,050 to $398,350

33%

15%

on taxable income over $398,350 to $450,000

35%

15%

on taxable income over $450,000

39.6%

20%

Hope this helps

lane

Thanks again

To use me again, just go here: Lane

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Lane
Lane
JD, MBA, CFP, CRPS
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Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986