Holding period

The holding period is the length of time you own an investment, from the purchase to the sale. In the US it decides how a gain or loss is taxed: assets held for more than one year produce long-term gains taxed at preferential rates, while assets held one year or less produce short-term gains taxed as ordinary income. For many investors, a few days' difference in timing can change the tax on a sale substantially.

How it is counted

Under IRS rules, the holding period starts on the day after the trade date of the purchase and includes the trade date of the sale. Settlement dates do not matter for this test.

Special cases

• Qualified dividends. To get the lower dividend tax rate, you must hold the stock more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.
• Inherited assets are treated as long-term regardless of how long the heir held them.
• Gifts generally carry over the giver's holding period.
• Wash sales. When a loss is disallowed under the wash-sale rule, the holding period of the sold shares is added to the replacement shares.
• Options and short sales have their own rules that can reset or suspend the holding period.

The holding period is a tax concept; it is unrelated to how long an investment should be held for other reasons.

Related terms

• Long-term capital gain
• Short-term capital gain
• Cost basis
• Wash sale
• Capital gain
• Full guide: Capital gains tax on stocks: 2026 rates, holding periods and basis