Asked in Taxes and Tax PreparationProperty Law
When do you pay Capital gains taxes?
September 12, 2007 2:29PM
Capital gains are taxes that you pay on profit as a result of selling an asset. Usually you reconcile these when you do your IRS tax returns. You get a credit for the cost of the house (and improvements), land, stocks or similar item (the "cost basis") and so just pay income tax on the remaining amount (the profit).
Certain taxes on capital gains are also capped at a lower rate than the highest rate of tax on personal income. For example, if you owned the property for more than one year, you would calculate the tax based upon the "long-term" capital gains rates.
Check out irs.gov for more information.