What Does Tax Law Say Regarding Capital Gains?

It can be confusing to figure out the tax law with respect to capital gains. The laws have changed several times over the past few years. Here are a few key features.

Capital Gain Rates

The taxes on capital gains are generally lower than the tax rates for other types of income. The most recent tax act lowered the taxes even more than previously established rates. The maximum tax law capital gain rates are based on the amount of the claim.

The rates will be either 0%, 15%, 25%, or 28%. The previous capital gain tax law allowed the rate to be as high as 35%, and didn’t have a 0% bracket.

Losses

Capital losses on investment properties are now tax deductible. Losses on personal property are not. There are also limits on the amount you can claim in capital losses. In most cases it’s a $3000 cap.

A tax accountant or other professional can help you sort through this for more complicated returns. In most cases though you can figure out the tax law on capital gains by simply visiting the IRS website.