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2008-2010 Capital Gains Taxex

It is my understanding that for people whose income is in the two lowest tax brackets capital gains taxes are reduced to zero for 2008-2010. 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 any capital gains tax be due to the state of Maryland).

Thanks.

John

Reply to
DJ Redlocks
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No. The amount that it takes to get the person to the top of the 15% bracket (see the Tax Rate Schedules) is not taxed. The balance is taxed at

15%. Note that this large of a cap gain would likely result in some AMT, in which case it wouldn't come out exactly as stated.

There's no similar provision in MD law, so you'd pay state/county tax on the entire gain.

Reply to
Phil Marti

Thanks!

Reply to
DJ Redlocks

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