At that point, it clearly would qualify for the capital-gains rate, as profit on a sale of a long-held business.

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Upon the ultimate sale of the property, basis-adjusted profit is taxed at the current capital gains rate, typically lower than income tax.

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Should you sell your second home after holding it for a year or more, you'll owe federal tax on any profit at the long-term capital gains rate, now a top 15%.

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If, however, you hold the ISO shares for more than a year before selling, all your profit is taxed as long-term capital gains at a current top rate of 15%.

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Since you've held both lots for more than a year, any profit is a long-term capital gain, taxed at a current top rate of 15%.

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