Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.
The tax paid on the sale of investment property is called capital gains tax. Capital gains tax is calculated against the amount earned by property that increased in value by its nature and not by the virtue of the owner’s income, rental income or interest earnings. Capital gains tax rates are typically lower than income tax rates. Capital gains tax will usually become a consideration when someone sells stocks, bonds or real estate. Calculating capital gains tax liability can range from very simple to much more complex for some real estate.
When people plan to sell real estate, they often consider what tax they will pay on the sales proceeds. Generally, the tax, if any, that is involved in the sale of investment property is capital gains tax.
Capital gains tax is a tax calculated against the amount of money earned solely by property that increased in value by its very nature and not by virtue of a person’s earned income (wages), rental income or interest earnings. A person’s pay, rental income and interest earnings are subject to income tax. Generally, capital gains tax rates are lower than income tax rates.
Read more about capital gains taxes and what you may owe on sold real estate in Lee’s article in the Lima News here: Legal-Ease: How much tax will I owe when I sell my property?
Source: LimaOhio.com, “Legal-Ease: How much tax will I owe when I sell my property?” by Lee R. Schroeder, August 5, 2017