Stock sale capital gains

14 May 2024 · 1 min

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1:01

In this brief video, the speaker highlights recent market performance, such as a 25% rise in the S&P 500 over three years and a 72% jump in GameStop stock, to remind investors that any profits from selling stocks are subject to capital gains tax. He defines capital gains as profits from selling assets and explains the two categories: short‑term gains (held less than a year) taxed at ordinary income rates, and long‑term gains (held more than a year) taxed at lower rates, sometimes up to 17% less. The key takeaway is that holding stocks for more than a year can significantly reduce the tax burden on realized profits.

Chapters

Over the past 3 years, the S&P 500 has gone up 25%. Just today, GameStop stock was up 72%. So if you've been making money in the market, you've got to keep in mind that you're going to be responsible for capital gains tax on any stock that you've sold. Capital gains are profits that you make from selling an asset, and that would include stock. So how do you determine what your capital gains tax is going to be on a stock sale? That depends on how long you held the stock. Profits you've made on stock held less than a year are called short-term capital gains, and profits you've made on stocks held longer than a year are called long-term capital gains. For short-term capital gains, the rate is typically the same as your ordinary income tax rate. But if you've held that stock for more than a year, you will pay significantly less capital gains tax, sometimes as much as 17% lower. What's the takeaway here? If you can hold your stock for more than a year before you sell it, you're gonna end up paying much less in capital—