If you have investment property (stocks, real estate, bonds, etc.) and make a profit on your investment when you sell the security, the difference between the sale price and your basis is your gain or loss, and your a gain is subject to capital gains tax.

Depending on how long you held the security for, it will either be taxed at short term rates or long term rates. Long term rates apply to securities held for more than one year and short term rates apply to securities held for one year or less. Short term rates are subject to ordinary income tax rates which can be as high as 40%, which is steep. Long term rates generally are taxed at a maximum of 20%. There are 3 different thresholds, 0%, 15% and 20%.

Something that you can do as the taxpayer is to look at your holding period of the property because a one day difference in the sale, could make a huge difference in the amount of tax that you pay. You can make more money and pay less tax.

We hope that this helps and if you have any questions, feel free to reach out to our team.