Comments on: Tax Free Free Investment Gains From 2008 – 2010

By: Rockon

Rockon — Thu, 05 Feb 2009 11:34:08 +0000

Thanks. we recently divorced and my income will be in the right tax bracket. So, I will wait to sell stock shares I got in the divorce settlement to coincide with the 2008-2010 dates.that will probably work.

By: bill m

bill m — Thu, 21 Aug 2008 17:07:01 +0000

do i bonds quailfy?

By: Teri

Teri — Wed, 16 Jan 2008 01:31:59 +0000

Paul – yes – that will probably work.

Nimesh, There are 2 issues here (off the top of my head).

1 – if you convert it to a rental, the value, I believe, would be when you converted it. So for rental purposes the value would start at the value today. (I think).

2 – Regardless, you generally do not get to take large tax losses unless you have a large gain to offset it against. Likewise, even if you could finagle a $100k loss, unless you had a $100k gain to offset it (or some large gains) you will only get to take $3k/year loss on your tax return. Might take 30 years.

When talking abour rental property you are best to talk with a CPA about your individual situation. IT can get very complex.

By: Nimesh

Nimesh — Tue, 15 Jan 2008 23:48:59 +0000

I have a tax question. Can I convert my personal property (primary residence) into a rental property and take tax break on the depreciation of the rental property after 2 years of rental? I bought a house for $370K which is now worth $270K. It would be nice if I can take this depreciation. Thanks in advance.

By: Paul Deame

Paul Deame — Mon, 07 Jan 2008 18:06:39 +0000

My grandson will be 19 in 2008, a full time student,a dependent with $2000 in unearned income and $1500 in earned income.He wants to sell $5000 in long term capital gains at the 0% tax rate because his single parent’s tax rate is in the 10-15% bracket.Do you agree?

By: Barrington Rhys-Danford

Barrington Rhys-Danford — Sat, 07 Jul 2007 20:29:12 +0000

RE: Zero Cap-Gain in ’08

How does the above help anyone?
A single T/P in 2007 using the
Standard Deduction and one personal exemption can make
$40,600 AGI before moving into the 25% bracket. In most parts of the USA that single T/P would need that much to survive leaving nothing to invest for a gain, capital or otherwise. Most investors are
beyond the 15% bracket, so no help to them.

By: Teri Newton

Teri Newton — Sat, 16 Jun 2007 03:24:28 +0000

Well, the law has been enacted, but it is for future years. There is always a chance that it can be changed before 2008, so maybe she wants to wait and avoid too much careful planning until the year actually arrives and the law is still actually in effect. In general I heard though this was a calculated tax break, as most are, and there are no plans right now in the works to repeal it. But tax law is finicky and I think I alluded to that. It is really really hard to do tax planning for the future as tax law is ever changing. I think mostly your CPA is not convinced this is set in stone, and I am not sure I am either. But I still think it is one worth planning for and keeping an eye on.

By: Dede

Dede — Tue, 12 Jun 2007 18:24:41 +0000

Teri,
I am curious about the info you have about there not being any capital gains tax in 2008-2010. I asked a CPA about this because we are trying to stratigize about selling a home we rent out. She told me that this is not a law in effect right now and it may never be enacted. Is she right or are you?
Thanks
Dede

By: Teri

Teri — Tue, 05 Jun 2007 14:46:03 +0000

Well, as far as the ROTH IRA thing, it makes no difference.

When you convert to a ROTH IRA you pay income taxes on the value of the account on the date of conversion. So a good strategy is to sell when the value is lower, and/or when you are in a lower tax bracket. It is just regular income tax in this case, not subject to the capital gains taxes or anything.

Also, if your income is over $100k you can not convert until 2010. Congress has removed the $100k cap in 2010. Just FYI.

I’d say just convert now (if you have the taxes saved up – do NOT withhold them from your IRA – it causes penalties and taxes in that case). Sooner is better than later, unless you expect to have a lower tax rate in the near future.

By: michele

michele — Tue, 05 Jun 2007 12:12:05 +0000

Would this window time frame be a good time to change a regular IRA ro a Roth IRA? I can’t seem to figure this out on my own. thanks m