Term & Conditions for Opening a Capital Gain Account in a Bank
Capital gain accounts may be a good way to save on taxes. Capital gain is the increase in the value of capital assets that may include bonds, shares, land and mostly real estate. Entrepreneurs and investors who make long-term capital gains ought to open a capital gain account while they wait to reinvest the profits.
Other People Are Reading
-
Long-Term Gains
-
Opening a capital gain account is only applicable if a long-term capital gain is made. Long-term gains are those made in a period of more than one year and thus exempt an investor from capital gains tax. The amount deposited in this account would be required to be utilized by the assessee, within the specified period, for acquisition of a new asset.
Timeline
-
An investor is required to deposit the amount of capital gains in the bank on or before the due date of filling the return of income. The sole purpose of opening a capital gain account is to seek exemption from capital gain tax therefore, the effective date for claiming exemption will be the date on which the bank receives your application and receives a check or draft to make the deposit.
-
Interests and Withdrawals
-
Amounts are freely transferable from the different types of accounts. It is important to consider that there are forms to be completed at every step of these transfers. The amount withdrawn from the savings account must be utilized within a 60-day period. A capital gain account does not exempt one from being taxed on the interest rates which vary from one bank to another.
-
References
- Internal Revenue Service: Ten Facts About Capital Gains And Losses
- Bankers Online: Regulation Q Prohibition Against The Payment of Interest On DFemand Deposits
- Exchange Bank: Money Market Funds vs. Money Market Accounts
- University Federal Credit Union : Regulation D FAQS
- Bankrate: Reporting Your Capital Gain
- Photo Credit bank image by Pefkos from Fotolia.com
