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Capital Gains And Tax

Some people don't understand what capital gains tax is however it is a pretty easy concept to grasp when you look at it closely.

Capital gains are monetary gains that you get from the sale of any assets that you may have. A capital gain is when you sell your asset for more than you bought it for. ALthough you will not always get a capital gain when you sell an asset normally you will. You cannot get a capital gain on an asset that you have for personal use. For example you cannot get a capital gain on the home that you live in, the house that you live in is for personal use.

Let's say you have a rental property. That property is an investment. You put money into it in the hopes that you will gain money from renting it out. That's what qualifies something gas an investment property now a personal property.

Now, if you decide to sell that property you will either make or lose money on that investment. You will make money on the investment if you sell it to someone for more than what you bought it at. Generally if you do any remodeling or if the market for real estate in your area is doing well you will make money on an investment. This is called a capital gain. If you sell your property for one hundred thousand dollars and you bought it for sixty five thousand dollars then you have a capital gain of thirty five thousand dollars.

This capital gain will be taxed by the government as it is income of a sort. This is income because you bought an investment and made money on it. You worked for that money by buying that property, managing it, and then later selling it.

How much you will be taxed on that money depends on how much of a return you actually got. How much you are taxed depends on the tax bracket that you will fall into. The more money you make the higher tax you will be required to pay.

If you need to see a tax bracket go online or contact the IRs. Capital gains may be taxed however a gain is a gain and a gain is always good.

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