Scottsdale Taxes | Capital Gains
When you sell or dispose of a capital asset such as property you own for personal use, investment properties, stocks or collectibles, the disposition will will result in a capital gain or loss. Here are some facts that taxpayers should be aware of regarding capital gains and losses.
- Capital assets can include property such as your home, your car, property held for investment, rental property, stocks, bonds or collectibles.
- A capital gain or loss is the difference between your basis and the amount you get for the asset when you dispose of it. You basis is usually what you paid for the asset but can vary based on different factors.
- You must include any and all capital gains and losses in you income and these may subject you the Net Investment Income tax. This tax applies to certain types of investment income that have incomes that meet certain thresholds.
- You can deduct losses on the sales of property that you have held for investment but you cannot deduct losses on the sale of personal use property.
- If you hold an asset for less than one year, the capital gain or loss will be treated as short term. If you hold the asset for more than one year, the capital gain or loss will be treated as long term.
- The tax rate on capital gains ranges from 0 to 20 percent depending on the taxpayers tax bracket. However, certain types of capital assets will be taxed at 25 or 28 percent.
- If you have a net capital loss for the year, you are limited to a deduction of $3000 per year until the capital loss is exhausted.
- You will need to file a form Schedule D to report your capital gains and losses and may also need to file a form 8949 to report each asset sold.
If you have any questions, feel free to contact us at Dusseau & Makris, PC, your Phoenix CPA firm.