Real estate capital gains?

40 years ago my Dad and I bought and sold rental property. At that time, in Texas, if I paid $60,000 for a property, and 2 years later I made a $10,000 gain, capital gain tax at that time, only required me to pay  on 40 percent of that gain. So in this case, it’s like i earned $4,000, instead of $10,000. Has this changed?

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  • 1 month ago
    Favorite Answer

    You didn't pay 40% of the gain you paid tax at ordinary rates on 40% of the gain and 0% on the rest.

  • ricky
    Lv 7
    1 month ago

    Mercedes, your answer is the same as what I said. And to the rest of you, if I made a profit of $10,000 on real estate that I owned for a year or more, I would only have to pay tax on $4,000. I wouldn’t PAY $4,000, I would pay at whatever MY tax rate is. So if I was in the 20 percent tax bracket, that comes out to $800 I owe for this sale. Without the capital gains tax, I would have owed $2,000. YES, it has been that way, and possibly still is. And for the depreciation person, please assume that when I say profit, that’s after depreciation and improvements have been considered 

  • 1 month ago

    What you claim was NEVER the law. I suspect you left out 90% of what actually determined your taxable gain.

  • 1 month ago

    All profits are taxed on a non residence.

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  • Anonymous
    1 month ago

    Since Texas hasn't had a state income tax, the only tax that would have applied is federal.

    As Wayne Z states, the rules of depreciation are tricky.  Let's say you rent your hypothetical house for two years and then sell for $70,000.  Your gain from APPRECIATON is $10,000 and taxed at long term capital gains rates.  Your gain from DEPRECIATION is the entire amount already claimed and is taxed at your marginal tax rate, but no more than 25%.

  • 1 month ago

    Tax laws change all of the time.

    That is not the current law.  You will also have to deal with the tax on the depreciation recapture.

    If you have a rental property and are getting ready to sell it, I suggest sitting down with a tax professional prior to selling.

  • Anonymous
    1 month ago

    That is not how it works now.

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