I recently talked to one of my DKTaxServices clients who said that her friend was lamenting that they had no income from their business (in fact a loss) but they’d still have to pay taxes from the sale of a rental property. In fact, that’s what the friend had been just told by his CPA. THAT ANSWER WAS WRONG!
I think this is a prime example of what happens when we get too focussed on what may or may not happen in the future and stop paying attention to the business at hand in the presence.
Here’s the deal. If you sell an investment that would otherwise get capital gains treatment (ie, investment that you held for one year and one day or more) and you’re in one of the two lowest tax brackets, you’ll pay ZERO NADA NOTHING in capital gains tax.
You don’t even have to worry about AMT, because the infamous bail-out bill gave us an AMT patch for one more year.
Morale of the story: We’re still in 2008 and there are a lot of planning opportunities right now. But they all go away on December 31st. Act now, while you can!