When you sell a ‘capital asset or’ sale usually results in a gain or loss equity. A ‘capital asset’ includes most of the (s) property (s) you own and use for personal or investment purposes. Here are 10 facts the IRS about gains and capital losses:
Information About Capital Gains and Capital Assets
- Capital assets are assets, like your home or car. They also include real estate, such as stocks and bonds investment.
- A capital gain or loss is the difference between the base and the amount you get when you sell an asset. Its base is usually what you paid for the asset.
- You must include all capital gains in income. From 2013, you may be subject to tax on net investment (NIIT, for its acronym in English). The NIIT is applied at a rate of 3.8 percent certain net investment income of individuals, trusts and family assets that have incomes above the statutory threshold amounts. For more details see IRS.gov / aca .
Deducting Capital Losses on Tax Return
- You can deduct capital losses on the sale of investment properties. You can not deduct losses from the sale of personal-use property .
- Gains and losses are capital; either long or short term, depending on how long you kept the property in his possession. If you held the property for longer than one year, your gain or loss is long-term. If the property had a year or less, the gain or loss is short-term.
- If your long-term gains outweigh the losses in the long term, the difference between the two is a net capital gain in the long term. If your net capital gain in the long term is more than your net capital loss in the short term, you have a ‘net capital gain.’
- The tax rate that applies to net capital gains usually depend on your income. For low-income individuals, the rate may be zero in some or all of its net capital gains. In 2013, the maximum net rate of capital gains tax increased from 15 to 20 percent. A tax rate of 25 or 28 percent also apply to net capital gains of special types.
- If capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $ 3,000 per year, or $ 1,500 if married filing a separate return.
- If your total net capital loss exceeds the limit that can be deducted for that year, you may incur losses that can not deduct the tax return next year. You treat these losses as if they occurred in that year.
- You must file Form 8949 , Sales and Other Dispositions of Capital Assets (in English) with its federal tax return to report your income. You also need to file Schedule D, Capital Gains and Losses (in English) with its declaration.
Additional Resources IRS of Capital Gains and Losses
- 1040 Central
- Tax Topic 409 – Capital Gains and Losses
- Publication 544 , Sales and Other Dispositions of Assets
- Questions and Answers on the Net Investment Income Tax