In most of the articles that have been written about the new tax law, much has been made of the reduction in the maximum capital gains tax from 28 percent to 20 percent, with the effective date retroactive to June 10, 1981.

I've got to tell you that, for most people, this much-touted tax reduction will mean nothing at all. That's because the only people who were paying the old maximum of 28 percent--and thus will benefit most from this change--were those in the 70 percent tax bracket.

In fact, the reason for the drop is that the maximum tax on all income, regardless of source, goes from 70 percent to 50 percent on Jan. 1, 1982.

The corresponding 20 percent ceiling on capital gains tax was made retroactive for transactions completed after June 9, 1981 to avoid disruptions in the market that might result from people delaying sales until next year to take advantage of the tax break.

Let's look at the arithmetic. For the past few years, 60 percent of a net long-term capital gain has been excludable from taxable income. (This same 60 percent exclusion continues under the new law.)

By simple subtraction, that meant that only 40 percent of such gains was subject to tax--at your normal tax rate. So if you were in, say, the 43 percent tax bracket, your federal income tax on a long-term capital gain was only 17.2 percent (43 percent of 40 percent).

You didn't hit a capital gains tax in excess of 20 percent until you got into a tax bracket higher than 50 percent. And even under the slightly higher tax rates for 1980, that meant taxable income in excess of $60,000 on a joint return or $41,500 on a single return.

Most people are in a lower tax bracket. So don't get excited over the new lower capital gains tax. It only offers tax savings to the relatively small number of taxpayers with enough income to have ended up (under the old rules) in a tax bracket higher than 50 percent.

Question: I own a town house, live in the two upper floors and rent the basement apartment. I have always treated the basement unit as income-producing property, reporting the rental income and deducting expenses and depreciation.

If I sell now and purchase another home (without a rental unit), I am concerned that I will be taxed on one-third of the appreciation and only be able to defer tax on two-thirds of the gain. Is there any way I can convert the basement back to residential property, by not renting it for a while? If so, how long must I take the property off the rental market?

Answer: First let me confirm that your concern is justified. That part of the gain on sale attributable to the rental portion of the total property would have to be reported and would be subject to capital gains tax.

You cannot escape the tax simply by removing the basement apartment from the rental market. The apartment would only qualify for the tax deferral if in fact it became a part of your principal personal residence.

Length of time is not a material factor. The criterion is whether or not the basement was actually incorporated into and became a part of your personal living space. Leaving it unrented for any period of time for the sole purpose of avoiding the tax would not work.

It becomes a question of demonstrating intent to convert what had been rental property to your personal residence. Once this has been satisfactorily accomplished, then there is no minimum requirement on how long you must wait before you can sell and defer the tax on the entire gain.

Keep in mind that even if you do make the change and then sell the property, you must take all of the depreciation claimed in prior years into account when calculating the cost basis of the house from which to figure your gain.