Tax Changes Worth A Closer Look
Currently, capital gains tax percentages for Santa Clarita Valley residents are at historic lows. This tax break applies to all United States citizens, but it may not last much longer. Capital gains tax rates are generally much lower than taxes on regular income, making them especially appealing.
These low rates will be in effect through December 31st of 2010, but President Obama has publicly stated that he will let these tax cuts expire and raise taxes to higher levels. Santa Clarita Valley investors may benefit themselves by selling their long-term assets this year and cashing in on a lower capital gains tax.
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Capital gains tax applies to the profit on the sale of an asset that was purchased at a lower price, e.g. stocks, bonds, real estate, etc. For example; a family in Valencia purchased a home for $300,000 in 2002 and sold it in 2010 for $450,000; they pay taxes on the profit of $150,000. Rather than pay taxes at their higher income rate, they can pay a significantly reduced tax rate if all qualifications are met for the capital gains tax break. You may want to speak with a trusted CPA or financial advisor who is well informed about these tax laws before acting on them.
There are certain qualifications that need to be fulfilled in order to benefit from this tax break, one of which is that the asset must be held for at least 366 days (one year plus one day). Speak with an advisor to see if it could work for you. Bankrate.com, Smartmoney.com and Yahoo.com/finance are excellent sources of financial articles that have additional information on these topics.
If you have any questions or would like to learn more about how to utilize this tax benefit to its fullest, please contact Total Financial Solutions in Newhall: 800-990-7344. You can also visit www.TFSWealth.com.