Long-Term Capital Gains

Long-Term Capital Gains refer to the profit earned from the sale of an asset that has been held for more than one year.

These gains are typically taxed at a lower rate than short-term capital gains, which apply to assets held for one year or less. The tax rate on long-term capital gains can vary depending on the taxpayer’s income level and the type of asset sold.

For example, if an investor buys shares of stock for $10,000 and sells them for $15,000 after holding them for two years, the $5,000 profit is considered a long-term capital gain and may be taxed at a reduced rate compared to ordinary income.