Illinois Capital Gains Tax
The Illinois capital gains tax may be on short-term or long-term assets. The short-term capital gains are generally taxed like any other income in the state while special rates are imposed on the long-term gains in Illinois. The assets that are held for less than one year are termed as the short-term capital gains assets and consequently the assets that are held for more than one year are referred to as the long-term capital assets.
The federal government implements the capital gains tax in the USA but some of the states may impose additional rates on the capital gains tax.
Along with the entire country, in Illinois also the capital gains tax rate on the long-term assets was reduced to 15% in 2003. For the individuals who are falling in the lowest two income tax brackets, the capital gains tax rate is 5%.
Before 2003 the capital gains tax in the USA used to be 20%, which will be again implemented in all the states in 2011. The Illinois short term capital gains are taxed at ordinary income tax rate.
With the use of 1031 Exchange provided by the Internal Revenue Service (IRS), capital gains tax in Illinois can be deferred considerably. According to it, if the profit earned by selling the property is invested again to buy a new property within a specified time, the profit thus earned over the sale is exempt from taxation. In a way, it can be said that with 1031 Exchange in Illinois, the old property is replaced with another new property thus deferring the capital gains tax. There are a number of financial agencies available in Illinois that provide service on the 1031 Exchange in the state. The capital gains tax is complicated to calculate and hence seeking guidance of skilled tax professionals is always advisable in Illinois.
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Last Updated on : 5th July 2013