After five years of a raging bull market in stocks, many
investors are sitting on huge capital gains. But it's easy to get
confused about what tax rates you'll pay on your capital gains
when you sell.
In the following video, Dan Caplinger, The Motley Fool's
director of investment planning, looks at the rules governing
capital gains, noting that short-term capital gains on assets
held for a year or less are subject to ordinary income tax rates.
For long-term capital gains on assets owned longer than a year,
rates of 0%, 15%, or 20% can apply depending on your regular tax
bracket. But Dan notes that some assets don't qualify for those
lower rates, citing examples like collectibles and the bullion
SPDR Gold Shares
iShares Silver Trust
as subject to a higher maximum rate of 28%. Dan also goes through
depreciation recapture and the special 25% rate that applies in
those circumstances. Dan concludes that it's important to know
the tax impact of your selling decisions
you pull the trigger, so you'll avoid nasty surprises at tax
Don't pay more tax than you have to
Knowing about capital gains tax is just one way to stay ahead
of the IRS. With the right planning, you can take steps to take
control of your taxes and potentially even lower your tax bill.
In our brand-new special report "
How You Can Fight Back Against Higher Taxes
How You Can Fight Back Against Higher Taxes," the Motley Fool's
tax experts run through what to watch out for in doing your tax
planning this year. With its concrete advice on how to cut
taxes for decades to come, you won't want to miss out.
Click here to get your copy today -- it's absolutely free.
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