Capital Gains
The profit you make when you sell an investment for more than you paid.
A capital gain is the increase in an asset's value between purchase and sale. Many tax systems treat assets held longer (long-term gains) more favourably than those sold quickly (short-term gains), which rewards patient, long-term investing.
Examples
- Buying shares for $5,000 and selling for $8,000 produces a $3,000 capital gain.