| Non Accountable Income for Home Purchase |
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raemart
Full Member
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Location: USA
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| Non Accountable Income for Home Purchase |
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What investments, when withdrawn, 'do not' count as income? I am under 59 years. I would like to purchase a vacation home. I could use it as income property as well. I will have a fairly high year of income in 2012 and do not want to add to this year's income if possible. I know 401k and Roth Ira's carry penalites so can't touch those. I have several other private stock investments and mutual funds. To cash any one of these out, would it add to my income this year? Thanks.
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Sun Jun 03, 2012 7:44 am |
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clydewolf
Senior Member
Cash: $ 50.25
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Joined: 27 May 2012
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| Re: Non Accountable Income for Home Purchase |
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quote:
Originally posted by raemart
What investments, when withdrawn, 'do not' count as income? I am under 59 years. I would like to purchase a vacation home. I could use it as income property as well. I will have a fairly high year of income in 2012 and do not want to add to this year's income if possible. I know 401k and Roth Ira's carry penalites so can't touch those. I have several other private stock investments and mutual funds. To cash any one of these out, would it add to my income this year? Thanks
Raemart,
When you have a gain from selling your "private stock investments" or selling a mutual fund, you will have to pay either short term or long term capital gains tax.
When you have loss, from selling the above assets, you can first deduct your capital losses from your capital gains. Then if there is still more loss, you can deduct the lesser of your remaining capital loss or $3,000 from your ordinary income.
See your tax form 1040 line 13: http://www.irs.gov/pub/irs-pdf/f1040.pdf.
Tax free interest is not taxable, but it may be used in various Modified Adjusted Gross Income calculations so you to not qualify for various deductions or tax credits.
Gifts and inheritances are not taxable to you.
You should not let the Tax Tail Wag the Dog.
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Sun Jun 03, 2012 7:32 pm |
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raemart
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Cash: $ 18.90
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Joined: 03 Jun 2012
Location: USA
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| Yes, I do have losses. |
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Thank you Clydwolf, What I am wanting to cash-out is a mutual fund that does have a loss with it. It went down with the market and has never recovered back completely to the original monies. The original amount put in total is $49,000 and it is worth just $46,000 present day, about a $3,000 loss. If I were to cash-out, it looks like I could deduct the $3,000 loss on 2012 taxes.
Still not clear if the $46,000 cash-out would be added to my 2012 income. If so, my income would be about $178,000 for the year. With the loss deduction of $3,000, I would come in just under the 33%($178,650) tax bracket at about $175,000(my highest ever). Haven't figured my regular normal deductions as yet either. Trying to stay at 28% this year. Thanks for the quick response.
p.s. I quit funding this mutual fund years ago. Also, surrender charges were satisfied about a year ago, so no surrender charges will apply to this cash out. Thank you.
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Sun Jun 03, 2012 8:37 pm |
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clydewolf
Senior Member
Cash: $ 50.25
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| Re: Yes, I do have losses. |
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Raemart,
quote:
Still not clear if the $46,000 cash-out would be added to my 2012 income.
When you funded this investment account with after tax money, and paid tax each year on any dividends you received,
When you have owned the investment for more than 1 year and you sell this and have a gain, only the gain would be added to your 2012 tax return.
That gain would be taxed at the more favorable Long Term Capital Gains tax rate.
The maximum Long Term Capital Gains Tax Rate for 2012 is 15%.
That 15% rate is set to expire at the end of 2012.
When you will have a $3,000 loss, you can First deduct that from your capital gains, and then if the loss is not consumed, you can deduct up to $3,000 from your other income.
If your loss exceeds $3,000 you can carry that excess loss forward to a future year to be used in the same manner.
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Sun Jun 03, 2012 8:53 pm |
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frivschool
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Location: canada
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thanks for share great post I recommend it to everyone..."
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Fri Jun 08, 2012 9:41 am |
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Finefeather
First Time Poster
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Joined: 08 Jun 2012
Location: Ahmedabad
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This is the reality of such a move. It is the same as taxing Business more
than other states and expecting to attract business to move to your state -
it will not happen. Thus you lose the tax revenue that you would have
otherwise by a tax decrease, as you gain by volume.
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Fri Jun 08, 2012 12:01 pm |
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