Taking Advantage of the Zero Capital Gains Rate

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The 0% tax rate on all or some of your long-term
capital gains on assets sold was extended by the American
Taxpayer Relief Act
passed in early January.  The following
are the capital gains rates for 2013 for various income levels:


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Here are some strategies that you can use to
take advantage of this zero tax rate when you sell your capital assets (stock,
mutual funds, rental property, business equipment, etc):


  • Sell capital assets that have a built-in gain
    in years where you have a business loss.


  • Time your sale for the year you write off
    major equipment sales.  For example:  Your business needs a delivery truck at a cost
    of $100,000.  You can depreciate the
    truck over 5 years or take the Section 179 100% first year write-off to lower
    your income enough to take advantage of the lower capital gains tax rates.


  • If your income is just slightly over the
    0% capital gains rate, consider accelerating those itemized deductions that you
    have control over.  Common itemized
    deductions that you can pay early include property taxes, charitable gifts,
    medical expenses, and employee expenses.


Warning:  Don’t forget that the 0% capital gains rate
only applies to assets that you held longer than one year.  Short-term gains are taxed at ordinary income
tax rates.