Any sale or transfer of capital asset which gives profit comes under the law of capital gains tax Arizona. The capital assets in Arizona include the real estate property, stocks, bonds, futures and mutual investment funds.The capital gains tax Arizona may vary with the type of the capital. For example a capital may be either a short-term capital or a long-term capital in Arizona. If certain asset or capital is held for less than 1 year, the capital is a short-term capital while the capitals, which are held for more than 1 year, are termed as long-term capitals. The short term capitals in Arizona are taxed at the same as the ordinary income rate. In Arizona, the capital gains tax rate on the long term capitals was reduced to 15% in 2003 while for the individuals falling in the lowest two income brackets, the capital gains tax on long-term capital is 5% in Arizona. However, the tax rate will change in 2011 and the rate previous to 2003, which was 20%, will be implemented again.
The Internal Revenue Service (IRS) of the USA allows the individuals to defer the capital gains taxes in Arizona as well as in other states too with some tax planning strategies like Charitable Trust (CRT), Structured Sale (Ensured Installment Sale), Private Annuity Trust, Installment Sale and 1031 exchange.
According to the 1031 exchanges in Arizona, after the sale of the old property; the money earned is invested to buy a new property thus deferring the capital gains taxes. There are a number of agencies in Arizona who expertise in giving the 1031 Exchange solutions to their clients. The assets that are mainly sold and purchased under the 1031 Exchange in Arizona are rental property, bare land, primary residence and commercial buildings.
There are some capital gains exemptions available in Arizona. The individuals who sell the primary residence can exclude up to $250,000 of capital gains tax while the married couples can escape up to $500,000 of capital gains tax. In the cases when an individual experiences both the capital gains and capital losses in the same tax year, the capital gains taxes get cancelled over the losses incurred.