Does anyone know about a capital gains tax holiday in 2008 for the 10-15% income tax bracket?
First of all, let me explain this. Since you rent out your property, most likely you already depreciate it. Depreciation is an annual deduction representing a method for recovering your investment’s cost. Depreciation is calculated on the portion of your investment that represents the cost of the building. No depreciation is allowed on the land costs of the rental property. A reasonable allocation should be made between the two. Depreciation on residential real property is computed on a straight-line basis over 27.5 years using a midmonth convention. A midmonth convention allows you one-half month’s depreciation for the first month the property is put in service, regardless of the day in the month it is placed in service. For example, if you buy the property on April 30 in rentable condition, you’ll be allowed eight and a half months’ depreciation for the year. Since 27.5 years represents 330 months, you’ll receive 8.5/330 of the building’s cost in depreciation in the first year and 12
