As an expert in the field of finance and taxation, I can provide you with a comprehensive understanding of the capital gains tax on real estate in the United States. It's important to note that tax laws are subject to change, and the information provided here is based on the tax code as of the knowledge cutoff date of May 21, 2014. For the most current tax rates and regulations, it's always best to consult with a tax professional or the Internal Revenue Service (IRS). Capital gains tax is a tax on the profit that you realize from the sale of a capital asset, such as real estate. The tax rate applied to the profit depends on various factors, including the length of time you've held the property and your income level. **Step 1: Understanding the Tax Brackets and Rates** In the United States, the capital gains tax rate is determined by your income tax bracket. As of May 21, 2014, the capital gains tax rates are as follows: 1. Zero Percent Rate: If your taxable income falls within the 10% or 15% tax brackets, any capital gains from the sale of property held for more than one year (long-term capital gains) are taxed at a 0% rate. 2. Fifteen Percent Rate: Individuals in the 25%, 28%, 33%, or 35% tax brackets are subject to a 15% capital gains tax rate on long-term capital gains. 3. Twenty Percent Rate: For those in the highest tax bracket, which is 39.6%, the capital gains tax rate is 20% for long-term capital gains. It's important to distinguish between short-term and long-term capital gains. If you sell a property that you've held for one year or less, the profit is considered a short-term capital gain and is taxed at your ordinary income tax rate. Step 2: Depreciation Recapture Another aspect to consider is depreciation recapture. If you've claimed depreciation on the property while you owned it, you may be required to pay tax on the recaptured depreciation when you sell the property. The rate for depreciation recapture is typically 25%. Step 3: State Taxes In addition to federal taxes, you may also be subject to state capital gains taxes. State tax rates vary widely, so it's important to check the specific rates in your state. Step 4: Exclusions and Deferrals There are certain exclusions and deferrals available that can reduce or postpone your capital gains tax. For example, if you're selling your primary residence, you may qualify for an exclusion of up to $250,000 for single filers or $500,000 for married couples filing jointly, under certain conditions. Step 5: Professional Advice Given the complexity of tax laws and the potential for significant financial implications, it's highly recommended to seek professional advice when dealing with capital gains taxes on real estate. A tax advisor can help you navigate the nuances of the tax code and ensure that you're taking advantage of all available deductions and credits. In conclusion, the percentage of capital gains tax on real estate can vary greatly depending on your individual circumstances. It's crucial to understand the tax implications of selling a property and to plan accordingly. read more >>

If you're in the 10% to 15% tax bracket, your capital gains tax rate is zero. If you're in the 25% to 35% tax bracket, your capital gains tax rate is 15%. If you're in the 39.6% tax bracket, your capital gains tax rate is 20%.May 21, 2014read more >>