When you sell an investment that has increased in value, you might need to pay capital gains tax on any profit. The amount of tax you pay depends on your tax bracket and how long youÆve owned the investment.

• Short-term investments. Investments you own for one year or less are short-term investments. You generally pay taxes on any profits from the sale at your normal income tax rate.
• Long-term investments. Investments you own for more than one year are long-term investments, which are generally taxed at a more favorable long-term capital gains rate. The rate is 20% for most taxpayers, or 10% for taxpayers in the 15% tax bracket.

If youÆre tracking your investments in Money, use the Capital Gains Estimator to have Money calculate your tax liability on investment gains youÆve made. This is also a great way to model tax implications before you sell.

1. On the Taxes menu, click Capital Gains Estimator.
2. In the # to Sell column, specify the number of shares sold for each investment (see Figure 5-5).
   
   
   Figure 5-5. Estimate your capital gains.
   
   
3. In the Sell Price column, specify the price at which you sold (or would sell) each investment or, if you are connected to the Internet, click Update prices in the left pane to use the current price.
4. Click Calculate.

The Results section shows the total amount raised by each sale, how much youÆd pay in taxes, and how much youÆd have left over. Money also shows your projected total tax on capital gains.

Offset gains with losses. If you sell some investments at a loss, you might be able use your losses to offset some or all of your gains. Money does not calculate your total capital gains reduced by capital losses.