In real estate and taxation, a Holding Period is the length of time a taxpayer owns an asset before selling or otherwise disposing of it. The Internal Revenue Service uses this period to determine whether any gain or loss is classified as short term or long term.
The holding period typically begins on the day after the property is acquired and ends on the date of sale. This distinction is important because long term capital gains are generally taxed at lower rates than short term gains, making the holding period a key factor in real estate investment decisions.
