Capital Gains & Losses

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Updated for 2012

Selling Investment Property

Property held for investment purposes may include:

1) Gains or losses on the sale of investment property are classified as:

2) Holding period:

Your holding period determines whether a gain receives short-term or long-term capital gains tax treatment.

Ordinary income tax rates are the regular federal income tax rates that apply to ordinary income such as, wages, self-employment income, interest, dividends.

Qualified dividends are taxed at the capital gains rates. Qualified dividends are reported on Form 1099-DIV in box 1b.

3) Capital losses:

Capital losses are deducted from capital gains. If capital losses exceed capital gains, the excess loss is deductible up to a maximum of $3,000 per year ($1,500 if married filing separately).

A capital loss is deducted on Form 1040 from other sources of income.

4) Where to report capital gains and losses:

Form 8949, Sales and Other Dispositions of Capital Assets:

Schedule D, Capital Gains and Losses:

Form 4797, Sales of Business Property: