Ever wonder, “What’s the tax rate for capital gains on inherited property?” If so, you’re not alone! It’s a common question, and rightly so, as it’s a crucial factor to consider when dealing with inherited property.
First, it’s important to know that the tax rate depends on the nature of the gain: short-term or long-term.
Short-term capital gains arise if you sell the property within a year of inheriting it. These gains are taxed as per your regular income tax rate. So, if you’re in the 22% tax bracket, your short-term capital gains will be taxed at that same rate.
Long-term capital gains, conversely, kick in if you’ve held the inherited property for more than a year before selling it. The rates for these gains are generally more favorable and range from 0% to 20%, depending on your overall income.
To sum up, the tax rate on capital gains for inherited property varies, and understanding this can help you plan strategically when deciding to sell an inherited property. As always, it’s smart to consult with a tax advisor to navigate these waters successfully.