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Once you obtain a real-estate in Maryland and sell it for an increased price, the difference between your trying to sell price and the purchase price is called capital gain. In other words, profit from selling a property for an increased price is the capital gain on the property. Capital gains could be short-term or long-term.

Short-term gain: If your property is sold by you within 36 months after buying it, the gain is called short-term capital gain.

Long-term gain: Whenever a gain occurs from selling a property after three years of its purchase, it is a long-term capital gain.

Calculation of cash gain: Capital gain is the difference between the total cost of purchase of the property and the attempting to sell price or the transfer price.

The cost of acquisition includes purchase price of the property, cost incurred in registration of the true estate property in Maryland, its repairs, storage bills, an such like. In a nutshell, all the expenses of capital nature are part of the cost of purchase.

The transfer price contains commission or brokerage paid by owner, registration expenses, cost of stamp papers, traveling and litigation expenses incurred while shifting the actual estate property in Maryland.

Capital gains tax:

Capital gains tax is charged on the gain that you make on selling a real estate for profit in Maryland. It is calculated by subtracting the cost of purchase of real-estate from the transfer price of the property. The difference is charged based on the tax bracket and included with your taxable income you fall into.

The tax rates for short-term and long-term capital gains in many cases are different. You must be alert of the tax structure of Maryland to learn what tax bracket you fall under and what tax rates are appropriate for your capital gains.

Criticism: It is often suggested that capital gains tax effects in double payment of taxes. The propertys value that is sold could have been contained in the value of assets sold by you while determining wealth tax. Hence, including capital gain in the income tax statement in the exact same year may lead to double-payment of taxes.

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