Zero Percent Capital Gains
For the coming year of 2008 through the year 2010 the capital gain tax rate will be zero percent. How are you strategizing to take advantage of this favorable situation?
Selling a $20,000 investment, purchased five years earlier for only $10,000, and paying no capital gains tax at all?
This will become reality for middle-income investors beginning in 2008 and will last for three years when a seldom-discussed provision of the recent tax cuts takes effect, providing middle-income investors with a can't-miss tax-planning opportunity.
After about $65,000 in adjusted gross you will start paying 15% But it will still be nice.
"Quite possibly some of our $80,000- to $100,000-income, married people might qualify, if they have enough deductions on Schedule A to get them under the joint $65,100 threshold. With enough mortgage interest and charitable deductions - and even the standard deduction and personal exemptions totaling $17,900 - that $65,100 isn't so hard to make for the average Joe.
And, quite possibly, people looking to retire at year's end and those who have options in how to take their retirement income - especially those who have "big wealth" in an individual stock - may be able to benefit. High-income earners need not look any further - at least of course, if you have parents in this category from whom you might inherit such money."
Let's say you are retiring and can delay your pension, have little or no other taxable income, and can use the tax laws to liquidate $200,000 worth of stock, which has a gain of roughly $80,000. Your income will come from the $200,000 in stock liquidation, but your taxes are based on your taxable income - the gain in the stock less deductions and personal exemptions. Do that for the three years the IRS allows you to, and you just saved about $36,000 in taxes and have diversified your holdings a bit.