A big hurdle for long-time owners of investment real estate is paying the capital-gains tax – people don’t like writing big checks to the IRS! But if you are thinking of selling a rental property, here’s a reminder that next year it’ll be worse. From latimes.com:
CNBC’s Larry Kudlow on Wednesday tried to get Treasury Secretary Timothy Geithner to clarify where the administration stands regarding the top tax rates on dividend income and long-term capital gains, which are set to rise on Jan. 1 without congressional action. But Geithner’s answer may just have confused matters for CNBC viewers.
“We’re going to make sure that we keep at 20% the existing rates on dividends and capital gains,” Geithner said. “We think that’s good policy.” But the “existing” top rates aren’t 20%, of course. They are 15%. Those were the cuts President George W. Bush pushed through Congress in 2003.
The 15% rate on long-term gains will revert to 20% on Jan. 1 unless Congress acts. Dividend income would return to being taxed at ordinary income tax rates, currently as high as 35% and scheduled to rise to a top rate of 39.6% in 2011.