Capital Gain
What is Capital Gain?
The profit from selling an asset for more than its purchase price.
Understanding Capital Gain
A capital gain is the increase in an asset's value, realized when it is sold. A sale below the purchase price is a capital loss.
In the U.S., gains on assets held more than one year are taxed at long-term rates, which are lower than the rates on short-term gains.
Formula
Example
Buy a share at $50, sell it at $80: the capital gain is $30.
FAQ
Can capital losses reduce my taxes?
In the U.S., losses offset gains, and up to $3,000 of net losses a year can offset ordinary income. The rest carries forward.