What is the difference between short-term and long-term capital gains?

What is the difference between short-term and long-term capital gains?

Short-term capital gains are profits from assets held for one year or less, taxed at ordinary income rates. Long-term gains are from assets held for more than a year, taxed at reduced rates.

What are the tax rates for each type?

Short-term gains are taxed at your regular income tax rate, which can be as high as 37%. Long-term gains are typically taxed at 0%, 15%, or 20%, depending on your income.

How can I minimize my capital gains taxes?

You can minimize capital gains taxes by holding investments for over a year, utilizing tax-loss harvesting, or investing in tax-advantaged accounts.

Are there any exceptions to these rules?

Yes, exceptions include certain types of assets like collectibles or real estate, which may have different tax treatments.

What should I consider before selling an investment?

Consider your current tax bracket, how long you've held the investment, and your overall financial goals.