Here’s the story of a middle child who made one heckuva investment! Eve Plumb, who played Jan Brady on the iconic 70s TV show, The Brady Bunch, recently sold her Malibu bungalow for $3.9 million. Ms. Plumb purchased the seaside property in 1969 for a mere $55,300, equivalent to approximately $360,000 in our present economy. Sure, it will be subject to tax as a long term capital gain, but it still made Marcia and Greg’s younger sister a rich gal.
Plumb put the three bedroom, 850 sq. foot Escondido Beach property on the market in April, listing it for a price of $4.15 million. In 1969, she bought the property at the age of 11 after her mother had suggested the investment. Plumb, who hasn’t lived in the home for thirty years, and her husband, Ken Pace, recently moved from Los Angeles to New York City. An architectural design firm has already drawn modernization plans for converting the property into a 3,500 sq. foot space with a retractable moon roof.
Of course, Ms. Plumb made a profit of approximately $3,844,700 on the sale, which is a long-term capital gain. Almost everything we own, such as a home, personal-use items like household furnishings, and even stocks or bonds held as investments, are all capital assets. When a capital asset is sold, the difference between the adjusted basis in the asset and the amount realized from the sale is a capital gain or a capital loss. Generally, an asset’s basis is its cost.
If an asset is held for more than one year before disposition, the capital gain or loss is long-term. If held for one year or less, the capital gain or loss is short-term. The tax rate on most net capital gains is no higher than 15% for most taxpayers. Some or all net capital gain may be taxed at 0% if a taxpayer is in the 10% or 15% ordinary income tax brackets. Still, a 20% tax rate on net capital gain applies to the extent that a taxpayer’s taxable income exceeds the thresholds set for the 39.6% ordinary tax rate, which may apply to Ms. Plumb. Twenty percent of a $3,844,700 profit amounts to a $768, 940.00 tax bill on her capital gain. Yet, Ms. Plumb is still walking away with over $3 million of total net gain.
Of course, the rules related to capital gains and losses are complicated and fraught with exceptions, thus necessitating an experienced and knowledgeable tax professional. If you have any tax-related question, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
