Fortunately, that income tax is lower because of capital gains rules. Many taxpayers mistakenly think the so-called capital gains tax is an extra tax.
Taxpayers pay income tax on all taxable sources of income, including capital gains.
It is the tax rate that is lower for certain capital gains. The Taxpayer Relief Act of 1997 reduced the tax rate for long-term capital gains. There is one string attached. To qualify for the lower rate, you must own the capital asset for at least 12 months. If you buy a stock, hold it for only six months, and then sell it at a gain, then you will pay your ordinary, full income tax rate.