It is my understanding that for people whose income is in the two lowest tax brackets capital gains taxes are reduced to zero for 2008. Can someone explain this to me?
Supposing a person with a low income sells an investment property for a large profit. Would the large profit (around $500,000) be exempt from capital gains taxes if their regular income puts them in one of the lower brackets?
Also, assuming that the gain is exempt from federal capital gains taxes, would they have to pay capital gains taxes to their state (in this case Maryland).
Thanks.
John