Money gurus are always preaching long-term investing. Not only will that give you a better shot at earning more, it'll also get you a lower tax rate when you sell.

But exactly what rate you get depends on several things, including when you bought the asset, when you sold it, your overall income level and sometimes what tax-code changes are made in the meantime.

Currently, capital gains may be taxed at 5 percent, 15 percent, 25 percent or 28 percent or a combination of rates. These tax levels are known as long-term capital gains and apply to assets that you hold for at least 366 days (more than one year). The long-term capital gain tax is, generally, much lower than what you pay on your regular income.

In fact, it is a taxpayer's income level that generally determines which capital gains rate is owed. If your profit pushes you into a higher bracket, you could possibly be taxed at a combination of rates.

And you could face yet another rate depending upon the type of property you sell.

 May is a good month for lower rates

For many years, investors whose overall income put them in the top four income-tax brackets faced a long-term capital gains rate of 20 percent, while lower-income investors paid capital gains taxes of 10 percent.

Tax-law changes in May 2003, however, lowered the rates by 5 percent each. Most investors, which generally means folks in the higher income ranges, now find their capital gains taxed at 15 percent. Taxpayers in lower income brackets pay only 5 percent on most investment earnings.

These lower rates were scheduled to end on Dec. 31, 2008.

However, in May 2006, lawmakers agreed to extend this tax break for investors for another two years. Now capital gains and qualified dividends will continue to be taxed at 15 percent (or 5 percent for lower-income taxpayers) through 2010.

Remember, each of these is the long-term capital gains rate. In most cases, that means you have to hold an asset for more than a year before you sell it. If you cash it in sooner, you'll be taxed at the short-term rate, which is the same as your ordinary income tax level, which could be as high as 35 percent.

And while the 5 percent and 10 percent rates have received the most attention, at least on Capitol Hill, for the last few years, there are several other categories of capital gains taxes. Here's a breakdown of all the tax levels.

5-percent rate
This capital gains rate applies to taxpayers in the 10-percent or 15-percent income tax brackets. They will pay a maximum 5-percent long-term gains rate on property held for more than a year.

Lower-income investors get an even better investment sale deal in 2008. That year, these filers will pay no tax on sales of long-term holdings.

The 5-percent rate still applies to a portion of your gains even if your asset sale pushes you into a higher bracket. For example, if, as a single filer, your taxable income was $25,000 but you netted another $7,000 from a long-term stock sale, some of that gain would still be taxed at the lower 5 percent capital gains rate even though technically you were bumped into the 25-percent tax bracket.

In this case, $30,650 (the 2006 income ceiling for the 15-percent bracket) minus your ordinary income of $25,000 gives you a $5,650 capital gains cushion at the 5-percent level. Only the remaining $1,350 of gain would be taxed at the 15-percent rate applicable to your new, higher tax bracket.

15-percent rate
This most widely paid capital gains tax rate applies to long-term investments by individuals in the 25-percent or higher tax brackets. When you hear "lower capital gains rate," it generally means this level, because there are few investors with incomes low enough to qualify solely for the 5-percent rate.

25-percent rate
This rate applies to part of the gain from selling real estate that depreciated. Basically, this keeps you from getting a double tax break. The Internal Revenue Service first wants to recapture some of the tax breaks you've been getting via depreciation throughout the years. You'll have to complete the work sheet in the instructions for Schedule D to figure your gain (and tax rate) for this asset, known as Section 1250 property. More details on this type of holding and its taxation are available in chapter three of IRS Publication 544, Sales and other Dispositions of Assets.

28-percent rate
Two categories of capital gains are subject to this rate: small business stock and collectibles.

If you realized a gain from qualified small business stock that you held more than five years, you generally can exclude one-half of your gain from income. The remainder is taxed at a 28-percent rate. If you've already hired a tax professional to help you sort out the 25-percent rate on depreciable property, she can help you figure this tax, too. Or you can get the specifics on gains on qualified small business stock in chapter 4 of IRS Publication 550, Investment Income and Expenses.

If your gains came from collectibles rather than a business sale, you'll still pay the 28-percent rate. This includes proceeds from the sale of a work of art, antiques, gems, stamps, coins, precious metals and even pricey wine or brandy collections.

Five-year rates disappear ... for now
The changes that dropped long-term rates also eliminated (for transactions after May 5, 2003) two capital-gains rates that previously had been in effect.

The 8-percent and 18-percent rates existed for investors who were committed for the longer haul. Both of these rates, the 8 percent one for taxpayers in the 10-percent and 15-percent income tax brackets, and the 18-percent rate for those in the top four brackets, were applied to assets held for at least five years. By dropping simple long-term (more than one year) rates even lower, the latest capital gains changes supersede the five-year rates.

However, depending on future tax legislation, the five-year rates (as well as the "old" 10 percent and 20 percent long-term categories) might return.

For now, the 5-percent and 15-percent rates are in effect through 2010. But they are still considered "temporary," just as they were in 2003, when they were lowered with an original ending date of Dec. 31, 2008.

These deadlines, both the one established in 2003 and again in 2006, were included to ensure that the tax cuts then don't produce too much red ink on the federal budget ledger sheet, at least for a while.

So the prior tax law and its higher rates won't return until Jan. 1, 2011. That is, of course, unless lawmakers make further changes before then.

In the face of such indefinite tax laws, what's an investor to do? Since most people will pay less taxes on their long-term gains thanks to the 2003/2006 laws, financial experts say to take advantage of today's lower rates when they fit into your portfolio plans.

But don't forget about the latest, Dec. 31, 2010, deadline. And definitely keep an eye on federal tax-law writers in the interim.