Expiring Tax Cuts
Here are some of the tax cuts that are scheduled to expire on December 31, 2012 if Congress does not take action before then:
- The maximum federal income tax rate on most 2013 long-term gains from real property sales is scheduled rise from the current 15 to 20 percent.
- The top rate on most long-term gains from selling properties acquired after December 31, 2000 and held for more than five years is scheduled to rise from the current 15 to 18 percent.
- If you sell a rental property for a gain in 2013, a 25 percent maximum rate will apply to the gain amount attributable to the cumulative depreciation write-offs you’ve taken on the property. The same 25 percent rate also applies to depreciation-caused gains from 2012 sales. (Depreciation can cause a taxable gain even if you sell a rental property for somewhat less than the amount you invested — because your basis in the property for tax gain/loss purposes is reduced by depreciation deductions.)
- The maximum rate on 2013 short-term gains from real property sales will rise from 35 to 39.6 percent.
- The maximum rate on net ordinary income from operating rental properties (when rental income exceeds your tax write-offs, including depreciation) will rise from 35 to 39.6 percent.
see: http://www.TaxEsq.com
