Hi,
Can someone tell me more about the capital gains. If it matters, I’m in Massachusetts.
Im not really familiar on the rules and what its all about. Can someone explain to me in layman’s terms so that I can better understand it?
Thanks!!
-SC
If you buy something and hold it for an investment purpose, then later sell it for a profit, that profit is your capital gain.
The amount of federal income tax you will pay on your capital gain depends upon what you sold, how long you held it, and your tax bracket. Accordingly, the federal tax rate applied to your long term capital gain might be 0%, 5%, 15%, 25%, or 28%.
Your state income tax rules might parallel the federal income tax rules, but then again they might not.
Oh OK…
So everyone on here that does the flipping get taxed someway or another via capital gains I’m assuming right?
No. Capital gains taxes do not apply to property flipping.
Property flipping is an active income business. Profits are taxed as ordinary (business) income and subject to self-employment income taxes, too.
I live here in Mass… hate to admit that… but ya know the Pat’s are going to win Tomorrow…
Anyway in Ma you have to pay both the state and the Feds tax. Any long term capital gain " assets held over one year" is taxed at 15% thanks to Pres. Bush then in Ma, they want 5.85% or 5.75%? Even if the Property was in another state. Because you file your taxes in Ma. And you are taxed at a higher rate for any depreciation you took in the past year if you rented it ect…
I myself don’t short term flip " hold’em a Year then sell" nor do I run under a LLC or Inc… Taxs implications are different. Short term Capital Gain tax rates are much higher Consult a tax accountant, it would be money well spent.