Depending upon the type of capital assets you have made investment in the tax rates of your capital gains are decided. There are few investments that taxed certain rates. And then, there are certain other investments that are eligible for tax-exempt status. Herein we are discussing different types of assets and tax rates on such capital gains.
Collectibles: If you have invested in collectibles for long term, then the gains through such investments are taxed at the flat rate of 28 percent. Similarly, in case of short term investments the capital gain tax rates are retained similar to ordinary rates of income tax. Collectibles include coins, stamps, precious gems, precious metals, antiques, rare rugs, fine art and alcoholic beverages.
Real estate: Gains from investment in real estate can be taxed as ordinary gain, long-term capital gain or short-term capital gains depending upon the way you have made use of the property. Similarly rental real estate gains will be taxed in combination with depreciation recapture and capital gain tax rates.
Business assets: The assets that are fixed and which you use in business are taxed according to ordinary gains. In business assets category comes equipment, furniture, and machinery that are an integral part of the business venture. The ordinary gains have been mentioned under the IRS form no. 4797.
Small business stock: Losses and gains on the small business stock are taxed under preferential tax rates. In case the total assets of the company are near to 50 million or more then, the small business stock gains are partially excluded under the 1202 Section. Similarly if the company faces losses near to 50,000 every year then under Section 1244, these losses are treated as ordinary.
Long term capital gains: An income earned from the assets that have been held for longer period of more than a year or so are levied special tax rates. In case, your total income finds you a place in the tax bracket of ten to fifteen percent, you have to pay zero tax rates. On the other hand, if your total income along with the income from capital gains, places you in the higher tax bracket you have to pay the tax at the rate of 25 percent.
So depending upon your type of investment and the total income earned through them, you have to pay capital gain tax on various amounts of profits. It is highly important that you understand the different types of investments correctly and pay your tax accordingly.