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The capital gains tax is a tax that is imposed on the profit made from the sale of a capital asset, such as a house, stock, or bond. In Massachusetts, the capital gains tax rate is currently 5.05%.
This means that if a person sells a house in Massachusetts for a profit and the profit is considered a capital gain, they will be required to pay a capital gains tax of 5.05% on that profit. The capital gains tax is in addition to any other taxes that may be owed, such as federal income tax.
It’s important to note that there are certain exemptions and deductions that can be applied to the capital gains tax. For example, the first $250,000 of a capital gain for single filers and $500,000 for married couples filing jointly is exempt from capital gains tax if the property is their primary residence, and they lived in it for 2 of the last 5 years before the sale.
It’s also important to note that, unlike the federal capital gains tax, Massachusetts does not recognize the Section 1031 exchange, which allows an investor to defer paying capital gains tax by using the proceeds of the sale of one property to purchase a similar property. Therefore, capital gains on the sale of any real estate in Massachusetts are fully taxable, regardless if the proceeds are used to purchase another property.
In summary, the capital gains tax in Massachusetts is a tax that is imposed on the profit made from the sale of a capital asset, such as a house, stock, or bond. The current capital gains tax rate in Massachusetts is 5.05%. There are certain exemptions and deductions that can be applied to the capital gains tax, such as the first $250,000 of a capital gain for single filers and $500,000 for married couples filing jointly if the property is their primary residence and they lived in it for 2 of the last 5 years before the sale. Additionally, Massachusetts does not recognize the Section 1031 exchange, and all capital gains on the sale of any real estate in Massachusetts are fully taxable.
