alternate min. tax - Posted by john f

Real Estate Investing
#1

Posted by Dave T on November 24, 1999 at 15:46:01:

Many of your points on tax avoidance strategies are well taken. However, the Taxpayers Relief Act of 1997 established “caps” on the capital gains tax, and, Congress decreed that the same tax rates (e.g., 10%/20%/25%) apply to capital gains for alternative minimum tax purposes for non-corporate taxpayers.

As I interpret the new rules, capital gains resulting from collectibles (such as art, antiques, gems, and stamps) are still taxed at your marginal tax rate up to a maximum of 28%. For everything else where the minimum qualifying holding period is satisfied, the 10%/20%/25% capital gains rates apply for AMT purposes as well.

#2

alternate min. tax - Posted by john f

Posted by john f on November 23, 1999 at 20:32:30:

I’m selling a property that will have over 1 million capital gains. What will the alternate min. tax do to the standard
20% tax rate for capital gains.

#3

use an IRA ? - Posted by leslie

Posted by leslie on November 26, 1999 at 04:03:27:

is it too late to let an IRA take at least some of the hit for the gain? assuming you have one or have time to get one, the IRA dosn’t need all cash, it can buy on terms and then sell…

#4

Run a simulation - Posted by John J

Posted by John J on November 24, 1999 at 10:58:26:

I have been caught by the AMT and recently by the Alternative Tentative Tax (an other obscure one), having to pay a lot more than the 20%. Having a high capital gain in one year will also wipe out a lot of your itemized deductions and credits for dependents - I learned the hard way. My recommendation - and what I do now - is to run a simulation of your tax return - I use Kiplinger TaxCut - and try various scenarios to see the impact on the bottom line. You might consider doing a lease-option, sell on contract, or a 1031, at least for part of the gain. You might also get with an estate planning attorney and consider setting up a Charitable Remainder Trust, with fixed monthly payments to you and a non-taxable life insurance policy. You probably will end up getting a lot more after taxes, but then Uncle Sam won’t get a dime on this sale. In addition you will even get substantial tax deductions in future years.

#5

Re: alternate min. tax - Posted by Glenn

Posted by Glenn on November 24, 1999 at 08:16:41:

Is this a personal residence, or an investment. If it is an investment, why not do a 1031 exchange to defer capital gains, so that 100% of your money is working for you, not 80%.
Glenn

#6

No effect - Posted by Dave T

Posted by Dave T on November 23, 1999 at 21:32:21:

The same tax rates (e.g., 10%/20%/25%) apply to capital gains for alternative minimum tax purposes.