Capital Gains

Today TaxMama hears from Shirley in Florida who asks. “At what rate are capital gains taxed? Suppose your adjusted gross income before the capital gain is $8,000 and the capital gain is $150,000. Is the rate for CG tax based on AGI before the gain or after the gain?”

Hi Shirley

That’s a good question. In fact, I was just looking up something along those lines yesterday for a client who has some installment sales that might be paid off this year or next. I wanted to take best advantage of the 0% capital gains rates in effect for the moment.

The rate will depend on the income level, including the gain.

So if part of the capital gain takes the income over the 10% threshold, that part of the gain will be taxed at the higher rate.

Essentially, except for the ordinary income portion of the rental gain which can’t be taxed at higher than 25% – for IRS purposes, the rest of the gain won’t be taxed at higher than 15%.

When you run the numbers through your software, you’ll be able to see the effects.

And remember, you can find answers to all kinds of questions about capital gains and other tax issues, free. Where? Where else? At

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