The new tax break on capital gains that went into effect Jan. 1, under the Taxpayer Relief Act of 1997 will have little, if any, effect on mutual fund holding periods, say industry analysts.
Investors will get a tax break on capital gains realized on assets held at least five years. For taxpayers in the 15 percent income tax bracket, capital gains rates will drop to 8 percent from 10 percent for fund shares held at least five years. For all other investors, capital gains rates will drop to 18 percent from 20 percent. The lower rate would apply only to capital gains realized after January 1, 2006.