In the state of Massachusetts, the various types of income like salary, interest, dividends, wages, pensions, IRA withdrawals, rental income and unemployment benefits are taxed at a rate of 5 percent since January 2003. But the income arriving from the investment programs like capital gains or income from the sale of stock or commercial property are taxed at a lower rate than other incomes in Massachusetts. In the state of Massachusetts, most of the capital gains taxes are entirely tax free.
There are some strategies provided by the Internal Revenue Services to defer or reduce the Massachusetts capital gains tax. Deferred sale trust, structured sale annuity and charitable trust are some of the strategies that the taxpayers can take up to defer the capital gains tax in Massachusetts but most commonly used tax deferring tool is 1031 Exchange in the country. According to it, if the capital earned from the sale of one old property is invested in another property within the specified period of time, the capital gains tax can be deferred considerably.
The 1031 Exchange in Massachusetts suggests exchanging the old property with a new like kind of property. The properties most certainly traded in 1031 Exchange are land, real estate property and commercial property. There are a number of agencies in Massachusetts that provide services on the 1031 exchange. The skilled financial professionals make the exchange of properties easy for the clients in Massachusetts.
The sales of capital assets that are taxable in Massachusetts are real estate property, mutual funds, stocks, bonds and currency. The capital asset may be either short term asset or long term asset. The assets that are held for less than one year are known as short term assets in Massachusetts.
