So, you've held an investment for over a year and made a profit? Congratulations! That profit might be subject to long-term capital gains tax, a rate generally lower than your ordinary income tax bracket. Think of it as a reward for patience!
But what exactly *is* it? Long-term capital gains tax applies to profits from selling assets held for more than one year, like stocks, bonds, or real estate. The rates vary depending on your income, but are generally 0%, 15%, or 20%. This is different from short-term capital gains, taxed at your ordinary income rate.
Understanding this tax can significantly impact your investment strategy. Proper planning, like considering tax-advantaged accounts or strategically timing sales, can help minimize your tax liability and maximize your returns. Talk to a financial advisor to explore personalized strategies and keep more of your hard-earned profits working for you!
