A capital gains tax is charged, so to speak, on capital gains…go figure. In other words, it’s a tax calculated by the profit gained by selling a non-inventory asset which was purchased at a lower price. No you don’t owe capital gains tax on the Snickers Bar you sold your buddy for lunch.

Check out the Q&A below:

Q: What qualifies as an asset where the capital gains tax may be applied?
A: A few of the most common are stocks, bonds, precious metals, and property.

Q: How do I know what the capital gains tax rate is? Ahh…tricky question, glad you asked.
A: Tax for long-term capital gains is 15% 
A: Tax for short-term capital gains is the current ordinary income tax rate.

Q: Can I deferr or reduce my capital gains tax?
A: Yes by executing one of the following methods: Deferred Sales Trust, 1031 Exchange, Structured Sale, Charitable Trust, Installment Sale, Self Directed Installment Sale (SDIS), and Private Annuity Trust (no longer valid).

We’ll add more Q&A as the questions arise. The above is to provide a simple basis on for a complex topic. For more information on capital gains as they pertain to you, contact us at your convenience.