Holding Period [Tax Law] Law and Legal Definition

The term holding period in the context of taxation refers to the duration of time for which a taxpayer holds his/her assets. A holding period is actually the time between the date of purchase and date of sale. The holding of assets can be either short term or long term. Assets held for one year or less are short-term and those owned for more than a year are considered long-term. It is on the basis of the holding period that the rate of tax on the gain that is received from the sale of a capital asset is determined.