Introduction to Capital Gains

You are probably familiar with the term capital gains from the endless battles on Capitol Hill over the capital gains tax rate. The Internal Revenue Service imposes taxes on income. This includes earned income, interest and dividend income, and income derived from the sale of appreciated property held for investment. Capital gains refer to income derived from the sale of investment property over and above the cost of the property sold. The IRS imposes different tax rates on capital gain income depending upon how long the owner held the property before selling it.