What are the tax implications of capital gains?

What are the tax implications of capital gains?

Capital gains tax is applied to the profit from the sale of an asset. It varies based on how long you've held the asset.

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

Short-term capital gains are taxed as ordinary income, while long-term gains are taxed at a lower rate, depending on your income.

How can I minimize my capital gains tax?

You can minimize capital gains tax by holding assets longer, utilizing tax-loss harvesting, or investing in tax-advantaged accounts.

Are there any exemptions for capital gains tax?

Yes, there are exemptions, such as the primary residence exclusion, where you can exclude gains from the sale of your home under certain conditions.

What records do I need to keep for capital gains tax?

You should keep records of purchase and sale dates, amounts, and any improvements made to the asset, as well as related expenses.