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