"Larry Bohen" <lbohen[at]audiobooksonline.com> wrote

- quote -

Capital gains are *generally* taxed at a maximum of 15%. If
you've been renting your condos, you've probably been taking
depreciation expense. To the extent your gain is
attributable to the accumulated depreciation, the maximum
tax rate is 25%. For example, assume that you bought it for
$100,000, and you claimed $75,000 of depreciation since
1985. If you sell it for $150,000, your gain is $125,000.
Of that, $75,000 has a maximum tax rate of 25% and $50,000
has a maximum rate of 15%.

The capital gain should not raise the marginal rate on the
rest of your income for regular tax purposes, although it
may have some nasty consequences with the alternative
minimum tax, depending on what other tax attributes are in
your return. If you fall into the AMT, a big capital gain
can cause your ordinary income that was taxed at rates below
28% to have the effective rate on the ordinary income
raised. If you have lots of ordinary income where your
effective tax rate on ordinary income is already at 28%, the
capital gain and the AMT should have no effect on your
overall tax. If your effective rate on your ordinary income
without the gain is below 28% and your capital gains are
large, the AMT will usually have the effect of raising your
effective tax rate on your ordinary income to 26%-28%. So
even though the stated tax rate on your income won't go up,
the AMT *may* have the effect of raising your tax bracket,
but not necessarily.

Brian Bivona, CPA

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"Larry Bohen" <lbohen[at]audiobooksonline.com> wrote:

- quote -

Without looking I believe the rate stays the same next year.
No, the flat rate doesn't push you into a higher bracket
directly but it might indirectly as a result of creating AGI
limitations on deductions/credits that you might get
otherwise. FYI, depreciation recapture is 25%.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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We've owned a few rental condos since 1985. The condos are
owned in our names (I.E. not a trust, corporation). The sale
market is much hotter than the rental market here (in
Vermont) and I am thinking of selling them.

I am concerned that if I sell all of them this year, that
the Capital Gains will put us in a higher income tax bracket
and increase our total tax liability.

Are current Gapital Gains taxed at 15%?

What is next year's Capital Gain tax rate?

Is Capital Gain added to our other ordinary income to
possibly put us in a higher income tax bracket?

--
Larry Bohen
www.audiobooksonline.com

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