What are long term capital gains and what are short term capital gains?
Answer Loretta, Thank you for your question. Capital gains and losses are classified for tax purposes as longterm or shortterm. If you hold the asset for more than one year before you dispose of it, your capital gain or loss is long term. If you hold it one year or less, your capital gain or loss is short term. If you have a net capital gain, that gain may be taxed at a lower tax rate. The term “net capital gain” means the amount by which your net longterm capital gain for the year is more than your net shortterm capital loss. The highest tax rate on a net capital gain is generally 15%. This means that your tax rate for these capital gains is 15% rather than you normal marginal income tax rate which is usually higher. In general the best way to think about short and long term capital gains is long term capital gains are taxed at 15% and your short term gains are taxed at the tax rate when you file your tax return. Keep in mind that the tax rates are set by Congress and can change over
