Zero Capital Gains Rate

AAA

DEFINITION of 'Zero Capital Gains Rate'

The capital gains tax rate of 0% that is charged to individuals who sell property in an "enterprise zone". The zero capital gains rate can be applied by a given level of government in order to prompt investment in a given area.

INVESTOPEDIA EXPLAINS 'Zero Capital Gains Rate'

In 2004, the U.S. Congress passed, and the president approved, the Working Families Tax Relief Act. The act contains provisions that extend the 0% capital gains tax to certain properties being sold within the D.C. Enterprise Zone.

The logic behind this act is to give an incentive to individuals to invest in this area. The rate is not exclusive to any one region, state or municipality. Legislators looking to create jobs and draw investment into a community frequently enact a zero capital gains tax rate, and/or institute other tax-related incentives in that area

RELATED TERMS
  1. Held-For-Trading Security

    Debt and equity investments that are purchased with the intent ...
  2. Capital Appreciation

    A rise in the value of an asset based on a rise in market price. ...
  3. Unrealized Gain

    A profit that exists on paper, resulting from any type of investment. ...
  4. Land Value

    The value of a piece of property, including both the value of ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Capital Gains Tax

    A type of tax levied on capital gains incurred by individuals ...
RELATED FAQS
  1. Is it true that you can sell your home and not pay capital gains tax?

    It is true in most cases. When you sell your home, the capital gains on the sale are exempt from capital gains tax. Based ... Read Full Answer >>
  2. Which states are the most expensive for high-income earners?

    The most expensive states for high-income earners are California, Hawaii and New York. The tax rates assessed by these states ... Read Full Answer >>
  3. What are employee share purchase plans?

    An employee stock purchase plan (ESPP) offers an incentive for employees to participate in their company's profitability ... Read Full Answer >>
  4. Why are some spin-offs taxable and some are tax-free?

    The manner in which a parent company structures the spinoff and divests itself of a subsidiary or division determines whether ... Read Full Answer >>
  5. What is the difference between income tax and capital gains tax?

    The conceptual difference between income tax and capital gains tax is that income tax is the tax paid on income earned from ... Read Full Answer >>
  6. What are the risks involved in a banker's acceptance?

    College savings accounts are excellent ways to encourage saving for future college costs. Contact your investment professional ... Read Full Answer >>
Related Articles
  1. Taxes

    Capital Gains Tax 101

    Find out how taxes are applied to your investment returns and how you can reduce your tax burden.
  2. Taxes

    Avoid Capital Gains Tax On Your Home Sale

    If you have property to sell and want to avoid capital gains tax, a Section 1031 exchange may be the answer.
  3. Entrepreneurship

    Can I Become An Angel Investor?

    Because of SEC rules, you already need significant assets to become an angel investor.
  4. Taxes

    Top Tax Issues For High-Net-Worth Individuals

    Wealth brings benefits, but from a tax perspective it creates special challenges. Here are some tax issues to pay attention to.
  5. Economics

    The Big Chill: What’s Wrong With The U.S. Consumer

    Based on the most recent April data, investors may, once again, be disappointed when the second-quarter gross domestic product (GDP) report comes in.
  6. Professionals

    A Look at How the Ultra-Wealthy Invest

    Ultra-wealthy investors are cautious this year as they approach the markets. Many target mutual funds and stocks, but most also diversify their portfolios.
  7. Trading Strategies

    The Top U.S. Regulated Stock Brokers

    To operate in the United States, stock brokers must comply with SEC regulations that protect investors. Here is a look at some of the best.
  8. Investing

    Should You Average Down When Trading Stocks?

    Averaging down on a stock can allow you to avoid having to admit you are wrong. On top of this and given enough time, the strategy can result in a profit.
  9. Trading Systems & Software

    Top 10 Brokerage Firms For Day Trading

    Day traders have different needs from long-term investors. Investopedia rates the top 10 brokerage firms for day traders.
  10. Personal Finance

    Are You In The Top One Percent Of The World?

    If you live in an industrialized country, cracking the top one percent of income earners isn't as difficult as you might think.

You May Also Like

Hot Definitions
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  2. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  3. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  4. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  5. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  6. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
Trading Center