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Recent Attention and Changes to Tax Laws

Recent Attention and Changes to Tax Laws

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Recent Attention and Changes to Tax Laws
In the 1997, the Taxpayer relief Act allowed many taxpayers to enjoy tax breaks that were not previously available to investors. For example, before that Act, taxpayers were forced to pay a high percentage of capital gain taxes on property that was sold for profit. Now, investors are allowed to make a certain profit, $250,00 per individual, and avoid paying capital gain taxes. Taxpayers can even take advantage of that rule more than one time in their lifetime. Previously, tax payers could only enjoy a tax break like that, once during their lifetime. The Taxpayer Relief Act of 1997, allowed for many changes in tax laws, including large reductions in capital gains taxes for many individuals.
The inheritance tax is set to expire this year, which effectively allows individuals to inherit without paying taxes. In fact, the sunset provision which covered the previous Taxpayer Relief Act, is set to expire in 2010. A Bill that would have continued that tax relief, and other tax laws, failed to pass in 2007. Although an additional Bill was introduced in 2009, it has not yet passed and is currently under review. As it stands now, many taxes are set to rise unless some action is taken on a Bill that would extend tax breaks, or create new ones. If no new changes take effect, the capital gains tax rate will revert to what it was before the Tax Relief Act went into effect.  
Rates that remain in effect through 2010, because of the Tax Reconciliation Act, will expire at the end of the year. In essence, Capitol gain taxes are set to increase significantly. After 2010, short term investments, will be taxed at a capital gains tax rate that matches an individuals income tax rate. That rate can be as high as almost forty percent. 
Long term investments will  generally have a capital gains tax rate of around twenty percent. In addition, investments that are not sold for at least five years, will be taxed at a lower rate then other long term investments. Yet, the capital gains tax rate is generally on a few percentage points lower. Investors that have properties that are extremely valuable, may enjoy added benefits from holding onto their investments for longer than five years.
The state of the economy in the United States, has forced many individuals to focus on tax laws. Many families are making great efforts to save money in every area possible. Unfortunately, some investors are not aware of the recent changes that are likely to take effect within capital gain tax rates. Especially now, small changes in the way investors sell their property, can have a big impact on their capital gains tax rate. In fact, investors can enjoy a significant savings if they become knowledgeable on the many changes taking place with capital gain taxes.

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