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Capital Gains Tax Rates

Almost everything you own and use for personal or investment purposes is a capital asset. Examples are your home, household furnishings, stocks or bonds held in your personal account.

When you sell a capital asset, the difference between the amount you sell it for and your basis, the amount you paid for it, is a capital gain or a capital loss.

A capital gains tax is a tax charged on profit realized on the sale of a non-inventory asset that was purchased at a lower price.

The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Capital gains tax rates are determined by the length of time held or holding period and the type of investment or asset.

Taxes are charged by the state over the transactions, dividends and capital gains on the stock market.

Along with federal capital gains tax rates, your state will also charge state income taxes on the capital gains realized. Most states will tax your capital gains as ordinary income based on state income taxes rates.

A new zero percent tax rate begins in 2009 - on long-term capital gains, and applies to individuals who are in the 10% and 15% marginal tax brackets. This zero percent rate expires at the end of 2010, when capital gains rates are scheduled to increase to at least 15%.

Capital gains rates are designed to encourage consumers to make long-term investments.

Tax Bracket Capital Gain Tax Rate
Short Term Long Term
10% 10% 0%
15% 15%
25% 25% 15%
28% 28%
33% 33%
35% 35%

Personal Residence Capital Gains Tax Rates

Personal Residence Tax Exemption: IRS tax exemption regarding living in your personal residence for 24 months of last 5 years. You may take up to $500,000 in profits tax free deduction on the sale of your home if you're married or $250,000 in profits