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This episode is a business coaching course that provides information on capital tax.

Results-Focused Training, Tools, and Workshops from Expert Business Coaches.

Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Definition Magician: Capital Tax: Any tax on a change in capital value (including capital gains tax, estate tax, or inheritance tax); as distinguished from a tax on income.
  • Lesson Nugget: Capital tax is the tax rate applied to capital gain.
  • Lesson Nugget: There are ways to avoid paying a capital tax on capital gains by reinvesting in property. For proper guidance, discuss your options with a tax professional.

capital tax understanding like udemy, Thrive15.com is an alternative to Lynda.com

[MUSIC PLAYING]

-We are joined here in sunny San Diego with Michael. There is no real estate topic too obscure. [INAUDIBLE]. And we are talking about this beautiful topic called capital tax. I'm going to read the definition. You can give us an ample example of what we're talking about. Any tax on a change in capital value as distinguished from a tax on income. What? What are we talking about today on Thrive15.com, an alternative to Lynda.com?

-So we're talking about a tax rate that's applied to capital gains, so the profits on an investment in capital items versus a tax that would be on just regular, ordinary income. So there's different tax rates that the government applies. Some apply to your regular income, ordinary income, but if you're an investor, and you buy a building for $100,000, and you sell it for $450,000, there's a different tax rate-- a capital tax rate-- that's applied to that profit.

-Let's say I'm a school teacher and I'm buying my first investment property right now. It's the first time I've ever bought one, and I'm going, I'm worried about the taxes, I'm worried about the capital tax, I'm worried about what I'm going to pay. A lot of people don't invest, because they get worried about the tax ramifications of it. When is the capital tax assessed, and how do you know what it's going to be?

-It's usually assessed on the sale or when you realize the gain.

-OK. So when you sell it, then that's when they're going to tell you about your capital tax.

-That's when you would recognize the profits and that's when you would realize that tax.

-So before you sell it, you'd probably want to talk to an accountant to find out what the taxes would be, right?

-Absolutely.

-And then when you do sell it, if you want to avoid paying taxes, and you want to put it into some more property, can you do that kind of thing?

-You can do something. It's called a 1031 exchange, and there's certain and very specific rules that you would need to follow to qualify, but effectively you can roll over or defer that game for a subsequent period.

-OK. Awesome. Michael, I hope that makes sense to all the Thrivers out there. I know that personally some of these terms can get confusing, especially when you hear them in succession, and so I really appreciate you bringing a lot of clarity there. And I just want you to know I jotted this down on a napkin last night. I was having this epiphany. And I thought, I'll go ahead and tell him No, I shouldn't. Yeah, I should not, but I'm going to read it to you here. I appreciate you as much as a third grader appreciates a good bouncy house.

[EXPLOSION]

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