| When you buy a real estate in Maryland and | | | | fees, cost of stamp papers, traveling and |
| sell it for a higher price, the difference | | | | litigation expenses incurred while |
| between the selling price and the purchase | | | | transferring the real estate property in |
| price is known as capital gain. In other | | | | Maryland. |
| words, profit from selling a property for a | | | | |
| higher price is the capital gain on the | | | | Capital gains tax: |
| property. Capital gains may be short-term or | | | | |
| long-term. | | | | Capital gains tax is charged on the gain that |
| | | | you make on selling a real estate for profit |
| Short-term gain: If you sell your property | | | | in Maryland. It is calculated by subtracting |
| within 3 years after purchasing it, the gain | | | | the cost of acquisition of real estate from |
| is called short-term capital gain. | | | | the transfer price of the property. The |
| | | | difference is added to your taxable income |
| Long-term gain: When a gain occurs from | | | | and charged according to the tax bracket you |
| selling a property after 3 years of its | | | | fall into. |
| purchase, it is a long-term capital gain. | | | | |
| | | | The tax rates for short-term and long-term |
| Calculation of capital gain: Capital gain is | | | | capital gains are often different. You must |
| the difference between the selling price or | | | | be alert of the tax structure of Maryland to |
| the transfer price and the total cost of | | | | know what tax bracket you fall under and what |
| acquisition of the property. | | | | tax rates are applicable for your capital |
| | | | gains. |
| The cost of acquisition includes purchase | | | | |
| price of the property, cost incurred in | | | | Criticism: It is often argued that capital |
| registration of the real estate property in | | | | gains tax results in double payment of taxes. |
| Maryland, its repairs, storage expenses, etc. | | | | The property's value that is sold might have |
| In short, all the expenses of capital nature | | | | been included in the value of assets sold by |
| are part of the cost of acquisition. | | | | you while calculating wealth tax. Thus, |
| | | | including capital gain in the income tax |
| The transfer price includes commission or | | | | statement in the same year may result in |
| brokerage paid by the seller, registration | | | | double-payment of taxes. |