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Do I Have To Pay Taxes On Long Term Capital Gains?
Do I have to pay taxes on long-term capital gains? The answer is yes, you do have to pay taxes on long-term capital gains. But the good news is that the long-term capital gain rate at this time is 15 percent. It may be phased out with the Bush tax cuts at the end of this year, so that’s something that you need to be cognizant of. If you want to make a deal to sell it, you may take advantage of the 15 percent rate- it may not be here forever. Ordinarily, your long term capital gain rate is half of what your ordinary tax rate is.
If you have long-term capital losses you can offset them against the gains. However, long-term capital losses cannot be taken all in one year and offset against ordinary income. I think you’re limited by $3,000.00 a year and need to carry it over year to year, but that’s something you can discuss with the accountant. Carrying over those long-term capital losses can be a problem.
Long-term capital gain versus short-term capital gain: short-term capital gains are taxed at your same tax rate versus the reduced rate for long-term capital gains, again, offset by short-term capital losses. So if you’d like to discuss this, give me a call at (727) 847-2288.