Taxable income is calculated as total revenue less total expenses and applicable deductions and exemptions that are allowed in that tax year. Taxable income also includes gains on assets held for investment which have been sold during the tax period as well as dividends and interest income. Taxable income from different sources may be taxed at different rates.
Note that taxable income may differ, sometimes substantially, from gross income and/or cash actually received. For example, an investment property produces $100,000 in net operating income (NOI), but the investor is able to claim $40,000 in depreciation allowance, then the taxable income would be $60,000 ($100,000 NOI less $40,000 in depreciation allowances).
The Investor's Cap Gains Guidebook
Re-invest your capital gains. Defer or Eliminate Taxable Income.
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Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.
Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested.
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