Contrary to popular opinion, not all of your capital gains are taxed at 15%. No, that would be far too simple. (And the IRS seems to really enjoy giving us a mental workout when it comes to filing our taxes.) So in addition to the 15% rate, there are several additional long-term capital-gains rates, which can range from 0% to 28%. Which category your sale will fall into depends on your income-tax bracket, the type of asset you sold, how long you held it and when you sold it. Keep in mind, short-term gains (on assets held for one year or less) are taxed at your ordinary income rate, which ranges from 10% to 35%.

Here's the breakdown of the long-term rates.

Investment Securities
The 5% Rate
Who's Eligible: Individuals in the 10% and 15% federal income tax brackets with net long-term capital gains from selling investment securities held for more than one year.

More people than you might think qualify for the new 5% rate. Why? Because the 15% bracket covers 2004 taxable income of up to $29,050 for singles, $58,100 for joint filers, $38,900 for heads of households, and $29,050 for married individuals who file separately. Here's how this rule works in real life. Say you're a joint filer and have $55,000 of "regular" taxable income in 2004 and a net long-term gain of $10,000 from stock sales. The first $3,100 of gain ($58,100 - $55,000) will be taxed at only 5%. The remaining $6,900 ($10,000-$3,100) will get taxed at the 15% rate you hear so much about. Now let's say your net long-term gain is $3,100 or less. In this case, you'll pay only 5% on the entire gain. You get the idea.

The 15% Rate
Who's Eligible: Individuals in the 25% federal income tax bracket or higher with net long-term capital gains from selling investment securities held for more than one year.

Real Estate (Owned as an Investment)
The 25% Rate
Who's Eligible: Property owners and real estate investment trust (REIT) investors in the 25% income-tax bracket or higher who hold property for more than one year.

Investment real-estate gains are tricky since they can be taxed in two different ways. If you claim depreciation deductions, at least some of those gains (so-called unrecaptured Section 1250 gains) are taxed at a maximum rate of 25%.

For example, say you own a rental duplex and have deducted $32,000 of depreciation over the years. That depreciation reduces your basis in the property and results in a bigger taxable gain (or smaller loss) when you sell. Now you sell in 2004 for a $100,000 gain. The first $32,000 (the unrecaptured Section 1250 gain) is taxed at a maximum rate of 25%. The remaining $68,000 of gain is taxed at the "general rule" maximum rate of 15%.

If you own shares in a REIT, you can receive capital-gains distributions subject to the 25% maximum rate. This happens when the REIT sells a piece of depreciable property and distributes the profit to its shareholders.

To the extent an unrecaptured Section 1250 gain falls into the 10% or 15% bracket, it gets taxed at that rate.

Collectibles and Small-Business Stock
The 28% Rate
Who's Eligible: Any collector in the 28% tax bracket or higher; some small-business stock shareholders.

Net long-term gains from collectibles (stamps, coins, baseball cards, Beanie Babies and the like) are subject to a 28% maximum rate rather than the usual 15%. This is one reason stocks are a much better investment than Beanie Babies.

To the extent a long-term collectibles gain falls into the 10% or 15% bracket, it's taxed at that rate.

The 28% maximum rate also applies to the taxable part of a gain from selling certain small-business stock that qualifies for a special 50% gain exclusion rule (under the tax code). Basically, these are shares in relatively small corporations that were originally issued to you and that you've owned more than five years. Consult your tax adviser if you think you have any shares fitting this description.

Homes and Small-Business Stock
The 0% Rate
Who's Eligible: Homeowners who owned and used their home as a main residence for at least two years before selling; some shareholders of small-business stock.

Believe it or not there are a couple of ways you can lock in a gain without paying Uncle Sam a dime. The first is if you sell a home you've owned and used as your main residence for at least two years out of the five-year period ending on the sale date. You are allowed to exclude (pay zero federal tax on) up to $250,000 of gain. If you are married, you can potentially exclude up to $500,000.

Even if you don't meet the two-out-of-five-years rule, you may still qualify for a reduced gain exclusion privilege. Our Home Sale Tax Estimator will help you figure this out. If your gain exceeds the amount you can exclude, the difference is treated as a long-term capital gain eligible for the 15% maximum rate (or 5% or 10% if your taxable income is low enough).

As mentioned, up to 50% of the gain from selling certain small-business stock can be excluded from your federal tax return. Again, consult a tax pro if you think you might qualify for this break. (Relatively few people do, but you could be one of the lucky ones.)