Are there further capital gains tax rate reductions?
A. In 2008, the capital gains tax rate for gains taxed in the lowest tax bracket (5 percent) will be reduced to zero. Q 20. When do the reductions in capital gains take effect? A. The 2003 Act took effect May 6, 2003 and applies to taxable years ending on or after May 6, 2003. There are special transitional taxation rules for taxable years including May 6, 2003. Q 21. Do these capital gains rates expire? A. Unless Congress extends them, the capital gains rate reductions will sunset December 31, 2008, at which time the rates will revert to 20 percent and 10 percent. Q 22. Are there any changes to depreciation recapture rules? A. No. Generally, when selling investment real property, a tax is imposed on all amounts previously taken as depreciation. Under prior law, these amounts were taxed as ordinary income and not capital gains. The 1997 Act provides for a 25 percent maximum tax rate on any gain attributable to depreciation already claimed on the property in the case of real property fo
