Holding Period

The length of time you hold an asset (the period beginning the day after you buy an asset and ending the day you sell it). Your holding period determines the maximum tax rate you will pay on a gain from the sale of a capital asset. If you hold an asset for more than one year, your capital gain or loss on the sale is considered to be “long-term.” If you hold it for less than one year, your capital gain or loss on the sale is considered to be “short-term.”