Final answer:
When there is a capital gain realized on the sale of a seller's rental or investment property, there are tax implications to consider. The tax implications depend on factors such as holding period and tax bracket. Consult with a tax professional for specific advice.
Step-by-step explanation:
When there is a capital gain realized on the sale of a seller's rental or investment property, there are tax implications that need to be considered. The tax implications will vary depending on the circumstances, such as how long the property was held and the seller's tax bracket.
In general, capital gains are subject to tax. If the property was held for one year or less, the gain is considered a short-term capital gain and is taxed at ordinary income tax rates. If the property was held for more than one year, the gain is considered a long-term capital gain and is taxed at lower rates.
Additionally, there may be additional taxes or exceptions to consider, such as the Net Investment Income Tax (NIIT) or the exclusion for the sale of a primary residence. It is important to consult with a tax professional or refer to relevant tax laws to determine the specific tax implications in a given situation.