How Capital Gains Bonds Help SAVE Tax - ritzybanister5828's Blog

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How Capital Gains Bonds Help SAVE Tax


Homeowners may have welcomed Chancellor George Osborne's decision to increase the inheritance tax threshold to 1million but other hidden taxes still menace your wealth. The AMT rates are 26% and 28%, which are not bad compared to the top regular income tax rate of 39.6%. Many tax advisors suggest that upper income individuals enjoy the AMT rate and accelerate income to pay 28% rates when they can, rather than higher ordinary tax rates. For a few Click Here capital assets such as equity, equity mutual funds, listed bonds and debentures etc, the holding period requirement is only 12 months. This can be lowered by taking benefit of exemptions provided by the Income Tax Act on capital gains when profit from the sale is reinvested into buying another asset.

Converted to stock : When stock in trade is converted into capital asset, the holding period of capital asset for the purpose of computing capital gains is to be reckoned from the date of conversion of stock in trade into capital asset because prior to that date, the asset was not held as capital assets; after conversion of stock in trade of shares into capital assets, shares were not held for 12 months before sale and therefore exemption under section 10(38) was not allowable.

This can in today's high priced real estate market add up to a hefty amount and some Nri's are steered into accepting black money which they are led to believe will save them capital gains tax. This can be achieved by investing gains in the Capital Gains Accounts minimize capital gains Scheme (CGAS) in any public sector bank. However, there are few exceptions to this rule like gain on depreciable asset is always taxed as short-term capital gain. The wash sale rules only apply to investment sales that result in a capital loss!

This can make the process of the sale more palatable and provide a dependable income stream for retirement. In their textbook, Nobel laureate Paul Samuelson and William D. Nordhaus noted: Because each worker has more capital to work with, his or her marginal product rises. In a two-year transition phase, from April 1, 2017 to March 31, 2019, the capital gains will be taxed at a concessional tax rate of 50 per cent of the domestic rate, according to the statement.

As in the case of capital gains bonds, the property acquired should not be transferred within a 3-year period from the date of transfer or construction; failure to adhere to the same will negate the tax benefits claimed. The difference between the depreciated tax basis of equipment and the amount of the purchase price allocated is taxed to the seller at the seller's ordinary income tax rate. Personally my view is that the tax should apply to future transactions," he added.

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