The Zero Percent Capital Gains Tax Rate
Saturday July 12, 2008
Starting this year, there's a new zero percent tax rate for long-term capital gains. To qualify for this zero percent rate, the gains have to be long-term. Also, the individual has to be in the 10% of 15% tax brackets for regular income. Here's a list of the 2008 tax brackets.
This zero percent rate comes with some opportunities to plan ahead. First, you can plan to hold on to profitable investments long enough to qualify as a long-term gain. At minimum, this means holding on to the investment for at least a year and a day. Investments held for a shorter period of time will be taxed as short-term gains at the regular tax rates. Second, tax rates are determined in part by your taxable income, which is your income after all deductions. Accelerating deductions will lower your taxable income, and thus help to keep you in a lower tax bracket.
More information: Capital gains and losses Capital gains tax rates Planning for the 2008–2010 Zero-Percent Adjusted Net Capital Gain Rate (The CPA Journal)
Hi William. I am curious as to how you keep abreast of changes in tax laws and provisions. You cite the CPA Journal in some of your articles, but what other ways do you keep current? Thanks!
Anthony, I use a vary of resources, both online and offline, to keep on top of our constantly changing tax situation. For online resources, I follow these blogs and news sites. The IRS also publishes several types of e-newsletters, and I get a newsletters from various offline tax research companies. But there’s a difference between passive and active consumption of information. The real secret to staying on top of what’s going on is all the emails, comments, and messages I receive every single day. This forces me to research areas of the tax laws I might have forgotten, or maybe haven’t been paying attention to, or maybe there’s even economic trends that are starting to bubble up into tax issues. So my number one source of information is always the readers here on About.com and my clients asking tough tax questions.
Good Morning William,
I am in the 10% tax bracket and a senior citizen. I am looking to sell a rental house that I have had for over 25 years. Before proceeding I would like to know if the zero-percent tax bracket is on 100% of the Capital Gains. I had heard that it is only on about $13,700 of the gains???? Or, has this changed for 2008???
Many thanks, Eileen