Capital Gains and Losses
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R. Klein, EA, Enrolled Agent
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When to use the capital gains tax rate


Under the US tax code, the profit made by selling assets can be taxed at a lower rate than normal income. The capital gains tax rate is used to separate this kind of income from the rest of your taxable income. Any time you decide to sell an asset, you are making a tax decision and should consider the tax implications.


An asset owned for less than a year is considered short term, and any profit made is taxed as normal income. If you have owned it for over a year, you can use the better tax rate for capital gains.


The tax rate paid on capital gains is dependent upon the taxpayer’s bracket.


  • Taxpayers in the 10 – 15 percent brackets pay no capital gains.
  • Taxpayers in the 25 – 35 percent brackets pay a 15 percent capital gains rate.
  • A taxpayer in the top 39.6 percent bracket pays 20% on capital gains.

If you sell assets at a loss, capital gains can be offset with up to $3,000 in capital losses. If your losses exceed the $3,000 limit, the excess can be held and used to offset gains in later tax years.


Depending upon your tax bracket, you’ll need to strategize differently when selling your assets to make the best use of capital gains rates. If you need help cutting through the confusion of the US tax code, you can trust the tax experts on JustAnswer to get you the information you need to save money on your returns.


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Preparing to meet with the capital gains tax Expert


Before you ask your question about the capital gains tax rate, you should have the following information ready:


  • Any documents related to income or expenses.
  • The name or description of the asset(s) you sold.
  • When the asset was purchased and sold.
  • How much you made when you sold the asset.
  • The asset’s cost or value.
  • Holdover capital gains loss from previous tax years.

With this information, the Expert should be able to give you the best advice for your situation.