| |
July
10, 2003-- Under the 2003 Jobs and Growth Act, the
capital gains rate has been reduced from 10% and 20% to 5%
and 15%, respectively, for sales and exchanges made after
May 5, 2003. The 5% rate will be reduced to 0% for tax
years beginning after 2007. For tax years that include May 6, 2003, the lower rates apply
to amounts properly taken into account after May 5, 2003.
Thus, the lower rate generally applies to capital assets
sold or exchanged and installment payments received after
May 5, 2003 and held greater than one year. Capital
assets sold prior to May 5, 2003 will be taxed at the old
rates of 10% and 20%.
For example: An individual has a total long-term net capital
gain of $50,000 in 2003. Of that amount, $35,000 is properly
taken into account in 2003 for period after May 5, 2003 and
$15,000 is properly taken into account before May 6. This
means that $35,000 of the $50,000 will be taxed at the 15%
rate, and $15,000 will be taxed at the previous rate at 20%.
The new lower capital gains rates apply for both regular and
alternative minimum tax purposes. Along with benefiting
investors, the reduction in the capital gains rate will cut
taxes on sales of homes on which the gains exceed the
$250,000 (Single)/ $500,000 (Joint) limits.
The effective date applies to tax years ending after
May 5, 2003 and beginning before January 1, 2009.
Back to 2003 News
|
|
