Capital Gains and Losses

Almost everything owned and used for personal or investment purposes is a capital asset

Examples include home, household furnishings, stocks held for investments. When a capital asset is sold, the difference between the purchase price (basis) and the amount for which it sold is either a capital gain (sold for more than the purchase price) or capital loss. Generally, an asset's basis is its cost. However, if the asset was received as a gift or through an inheritance more information is required. 

Some capital losses are tax deductible and can offset capital gain. People who have such assets frequently review their portfolios prior to tax time to help determine if some of the assets that have lost value should be sold for just that purpose.

Long-term capital gains is property held for more than 1 year.

Short-term capital gain is property held for less than 1 year.



Snapshot of 2013 Federal Capital Gains Tax Rates for Assets Held Long Term

Single Taxpayer Married Filing Jointly

Capital Gain Tax Rate

Sec. 1411 Medicare Surtax Combined Tax Rate
$0 - $36,250 $0 - $72,500 0% 0% 0%
$36,250 - $200,000 $72,500 - $250,000 15% 0% 15%
$200,000 - $400,000 $250,000 - $450,000 15% 3.8% 18.8%
$400,001+ $450,0001+ 20% 3.8% 23.8%