Posted by JHyre in Ohio on November 19, 1998 at 06:03:31:
This is true but incomplete. Subject to a billion excceptions, depreciation in excess of straight-line is taxed at ordinary rates. The remaining straight-line portion is taxed at 25%. See IRC Sections 1245, 1250 and the new cap gains rules.
Capital Gains - Posted by John OH
Posted by John OH on November 18, 1998 at 02:37:17:
I should know this - every investor should. What is the tax break on long and short term capital gains? What is the criteria for long vs. short? Thanks.
Re: Capital Gains - Posted by JHyre in Ohio
Posted by JHyre in Ohio on November 18, 1998 at 15:03:01:
Long-Term Capital Gain (i.e.- asset held 18+ months) is taxed at 20%, unless you are in the 15% income tax bracket, in whih case it is taxed at 10%.
Mid-Term Gain (held 12 - 18 months) is generally taxed at 28%.
Short-Term Gain (Held< 1 year) is taxed at ordinary rates.
ALL of the above rates are subject to “recapture” rules. If you sell certain types of property (including most real-estate) that were depreciated for tax purposes, the amount of gain from the depreciation is generally taxed at ordinary income rates.
For example, a building purchased for $100 and sold for $250 produces $150 in gain. If the building was sold by a non-dealer 2 years later, the gain is long-term capital gain and taxed at 20% except for recapture. Any depreciation on the building up to the amount of the gain is “recaptured” at ordinary tax rates instead of the more favorable capital gains rates.
Re: Capital Gains - Posted by Dave T
Posted by Dave T on November 18, 1998 at 18:26:17:
My tax advisor tells me that depreciation recapture is taxed at 25%.