Recent History of Changes in Federal Tax Laws – President George W. Bush signed a series of tax cuts into law. The largest was the “Economic Growth and Tax Relief Reconciliation Act of 2001”. It was estimated that it would save taxpayers $1.3 trillion over ten years, making it the third largest tax cut since World War II. The top four tax rates dropped from 28% to 25%; 31% to 28%; 36% to 33%; and 39.6% to 35% respectively.
The “Jobs and Growth Tax Relief and Reconciliation Act of 2003” accelerated the tax rate cuts that had been enacted in 2001, and temporarily reduced the federal tax rate on capital gains and dividends to 15%. Two tax bills signed in 2005 and 2006 extended through 2010 the favorable rates on capital gains.
Because it seems likely that the capital gains rate will go up no later than the end of 2010, now is a good time to review long term real estate investment strategies with your tax professional. It’s also important to remember that 1031 exchanges (also called Starker exchanges) do not avoid taxes, they only defer them into the future. So it’s even more important to review strategies if you are considering an exchange in the near future.
If you’d like to learn more about the history of income taxes in our country since 1791, here is the link an interesting article – http://www.infoplease.com/ipa/A0005921.html.
Some information above from Information Please® Database, © 2007 Pearson Education, Inc. “A History of Income Taxes in the United States”
