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Alternative Minimum Tax |
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Dear Ms. Lank, We will be closing on the sale of our cottage and hopefully you can answer a couple of questions for me. We have owned this property for eleven years and were not sure which applies to this sale, "Capital Gains Tax ”or “Minimum Alternative Tax" or, are they the same thing?
Whichever case is correct, can you tell me what the applicable tax rate will be?
Also, over the past eleven years we have invested about $16,000 in permanent improvements and repairs, are these tax deductible? |
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The cost basis for your cottage includes not only purchase price but also anything you spent on permanent improvements (not repairs or redecorating.) Subtract that, commission and legal costs of buying and selling from your sale price, and what it left is a long-term capital gain. The federal rate on your gain is no more than 15 percent; state tax is lower.
Alternative minimum tax is something completely different
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Edith
Originally published on July 6, 2006 |
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