Taxes

Capital Gains

Definition

The profit from selling an investment for more than you paid. Short-term capital gains (assets held less than 1 year) are taxed as ordinary income. Long-term capital gains (1+ years) are taxed at preferential rates of 0%, 15%, or 20%.

Related Terms

Tax-Loss Harvesting

Selling investments at a loss to offset capital gains taxes, then immediately reinvesting in a similar (but not identical) asset. Can save significant money on taxes while maintaining market exposure.

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