Capital Gain

Gains from the sale of certain assets owned for more than one year and inherited assets such as stocks, bonds and real estate enjoy a special tax treatment referred to as a long-term capital gain. Gains from assets held for a shorter period are called short-term capital gains and are not eligible for special tax treatment. Long-term capital gains do benefit from special tax rates and are generally taxed at 0% to the extent a taxpayer is in the 15% or lower tax bracket and 15% for the balance through the 35% tax bracket. To the extent a taxpayer is in the 39.6% tax bracket, the capital gain rate is 20%. There are some exceptions; to the extent that gain results from depreciation on real property claimed since May 1997, the tax rate is 25%, except to the extent the taxpayer is in the 10% or 15% bracket, in which case those rates would then apply. Also, long-term capital gains from the sale of collectibles such as artwork, coins, stamps, etc., are taxed at 28%.

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