The benefit of being classified as a capital gain is that the income is subject to a tax rate that maxes out at 15%,which may be well below the tax rates associated with depreciation recapture income and ordinary income for a particular investor.In order to qualify for the lower capital gain tax rate,the property being sold must be held for more than:

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In order to qualify for the lower capital gain tax rate, the property being sold must be held for more than 12 months. This is known as the long-term capital gain tax rate. Holding the property for less than 12 months would result in it being classified as a short-term capital gain and subject to higher tax rates.

The Benefit of Being Classified as a Capital Gain Is