What Is a Capital Gain?

A capital gain is the increase in value of an asset between the time you buy it and when you sell it for a higher price.

Capital Gain Overview

Capital gains apply when you sell something—like stocks, real estate, or collectibles—for more than you paid. These gains are taxable and can be classified as short-term (held one year or less) or long-term (held more than one year), with long-term gains typically taxed at lower rates. Understanding capital gains is essential for managing investment returns and tax liabilities. You only pay taxes when the gain is realized, meaning after the asset is sold.

Key Points

• A capital gain is the profit made from selling an asset for more than you paid.
• Common with stocks, property, or investments.
• Taxed differently depending on how long you held the asset.