Capital gains is a form of taxation. It’s actually a preferred or lower rate than pay on your ordinary earned income. Capital gains in the United States at the time of this recording have a maximum rate of 20% for the ordinary appreciation that you enjoy on capital assets including real estate that’s held for investment or business purposes. Some gains are derived because you depreciated the property. Every year you took a depreciation deduction you took an incremental decrease in your basis. Over time you’ll whittle your basis down to zero on your improvements. That gain that’s calculated from your depreciation deductions is taxed at a higher rate of 20%.
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