Capital gains taxes apply to profits from the sale of assets, such as stocks, bonds, and real estate. The tax rate depends on a number of factors, such as the type of asset sold and the length of time it was held. For example, long-term capital gains are typically taxed at a lower rate than short-term capital gains. In addition, special rules may apply to certain types of assets, such as collectibles and small business stock.
Tax-exempt capital gain:
Capital gains from real estate transactions are subject to taxes in the US As an exception, a capital gain of a maximum of $250,000 (for singles) and $500,000 (for married couples) is valid when selling a property that for a minimum of two years it served as their principal residence.
For foreigners, a stay of 730 days within a five-year period is enough to comply with this two-year period. Only time actually spent in the US is considered. Under the right conditions, a sizeable tax-free capital gain can be made in the US.
Taxable capital gain:
In all other transactions, the capital gain is taxable. The determination of the profit is made under the usual aspects: the purchase price and the investments made are deducted from the sale price.
For personally owned real estate (personally owned, through a Limited Liability Company or LLP) the maximum personal tax rate applies for a duration of ownership of less than 12 months. The rate for capital gains with a holding time of 1 year and 1 day or more is currently between 0 and 15%. The exact determination of the tax rate is made according to the taxpayer’s tax progression scale.
Capital gains taxes can be complex, so it’s important to consult with a tax professional to make sure you’re following the law.
