Posted almost 9 years ago

Capital Gain Taxes What Are They and Why Your Seller Is Motivated

Here is a little ditty from the Beatles and it conveys to me the sardonic reasons that the IRS impose on consumers and for the seller that translates as being more motivated to sell their home since capital gain taxes would be levied on a 100% cash out.

Wikipedia does a great job at explaining the what and I compare that with investopedia's explanation with my reasons for finding someone that is free and clear based on the empty-nest syndrome and other variables that have a long-term effect which now aligns with the life change index previously discussed.

According to Wikipedia

In the United States of America, individuals and corporations pay U.S. federal income tax on the net total of all theircapital gains. The tax rate depends on both the investor's tax bracket and the amount of time the investment was held.Short-term capital gains are taxed at the investor's ordinary income tax rate and are defined as investments held for a year or less before being sold. Long-term capital gains, on dispositions of assets held for more than one year, are taxed at a lower rate.[1]

According to Investopedia

A capital gains tax is a type of tax levied on capital gains incurred by individuals and corporations. Capital gains are the profits that an investor realizes when he or she sells the capital asset for a price that is higher than the purchase price.

Capital gains taxes are only triggered when an asset is realized, not while it is held by an investor. An investor can own shares that appreciate every year, but the investor does not incur a capital gains tax on the shares until they are sold.

Win/Win Scenario for the Seller and Buyer/Invester

Most countries' tax laws provide for some form of capital gains taxes on investors' capital gains, although capital gains tax laws vary from country to country. In the U.S., individuals and corporations are subject to capital gains taxes on their annual net capital gains.

It is important to note that it is net capital gains that are subject to tax because if an investor sells two stocks during the year, one for a profit and an equal one for a loss, the amount of the capital loss incurred on the losing investment will counteract the capital gains from the winning investment. Does this apply to real estate sales...YOU BETCHA!

To learn more about capital gains taxes, check out

Capital Gain Taxes What Are They and Why Your Seller Is Motivated

Most countries' tax laws provide for some form of capital gains taxes on investors' capital gains, although capital gains tax laws vary from country to country. In the U.S., individuals and corporations are subject to capital gains taxes on their annual net capital gains.

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