What is a capital gain?
What’s the difference between a short-term and long-term capital gain?
Short-term gains come from the sale of property owned one year or less and are taxed at your maximum tax rate, as high as 37% in 2020.
Long-term gains come from the sale of property held more than one year and are taxed at either 0%, 15%, or 20% for 2020.
What is the holding period?
If you sold on April 15, you would have a short-term gain or loss.
A sale one day later on April 16 would produce long-term tax consequences, since you would have held the asset for more than one year.
How much do I have to pay?
Short-term profits are taxed at your maximum tax rate, just like your salary, up to 37% and could even be subject to the additional 3.8% Medicare surtax, depending on your income level.
Long-term gains are treated much better. Long-term gains are taxed at 15% or 20% except for taxpayers in the 10% or 15% bracket. For low-bracket taxpayers, the long-term capital gains rate is 0%. There are exceptions, of course, since this is tax law.
Long-term gains on collectibles—such as stamps, antiques and coins—are taxed at 28%, unless you’re in the 10% or …read more