I'm a freelance journalist, content creator and regular contributor to Forbes and Monster.[author_bio_separator] I've written for AARP, the BBC, Family Circle, LearnVest, Money, Parents and Prevention, among others. Find me at kateashford.com or foll.
Kate Ashford ContributorI'm a freelance journalist, content creator and regular contributor to Forbes and Monster.[author_bio_separator] I've written for AARP, the BBC, Family Circle, LearnVest, Money, Parents and Prevention, among others. Find me at kateashford.com or foll.
Written By Kate Ashford ContributorI'm a freelance journalist, content creator and regular contributor to Forbes and Monster.[author_bio_separator] I've written for AARP, the BBC, Family Circle, LearnVest, Money, Parents and Prevention, among others. Find me at kateashford.com or foll.
Kate Ashford ContributorI'm a freelance journalist, content creator and regular contributor to Forbes and Monster.[author_bio_separator] I've written for AARP, the BBC, Family Circle, LearnVest, Money, Parents and Prevention, among others. Find me at kateashford.com or foll.
ContributorBen is the Retirement and Investing Editor for Forbes Advisor. With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for B.
Ben is the Retirement and Investing Editor for Forbes Advisor. With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for B.
Ben is the Retirement and Investing Editor for Forbes Advisor. With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for B.
Ben is the Retirement and Investing Editor for Forbes Advisor. With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for B.
Updated: Nov 15, 2022, 10:21am
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You earn a capital gain when you sell an investment or an asset for a profit. When you realize a capital gain, the proceeds are considered taxable income.
The amount you owe in capital gains taxes depends in part on how long you owned the asset. Long-term capital gains taxes are paid when you’ve held an asset for more than one year, and short-term capital gains apply to profits from an asset you’ve held for one year or less.
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Long-term capital gains are taxed at lower rates than ordinary income. How much you owe depends on your annual taxable income. You’ll pay a tax rate of 0%, 15% or 20% on gains from the sale of most assets or investments held for more than one year.
When calculating the holding period—or the amount of time you owned the asset before you sold it—you should count the day you sold the asset but not the day you bought it. For example, if you bought an asset on February 1, 2023, your holding period started on February 2, 2023, the one-year mark of ownership would occur on February 1, 2024.
When you own an asset or investment for one year or less before you sell it for a profit, that’s considered a short-term capital gain. In the U.S., short-term capital gains are taxed as ordinary income.
That means you could pay up to 37% income tax, depending on your federal income tax bracket.
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ContributorI'm a freelance journalist, content creator and regular contributor to Forbes and Monster. I've written for AARP, the BBC, Family Circle, LearnVest, Money, Parents and Prevention, among others. Find me at kateashford.com or follow me at @kateashford.
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