Capital Gain

A capital gain is a profit that results from investments into a capital asset, such as stocks, bonds or real estate, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.

A capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.

Short-term capital gains are usually taxed at a high rate, to deter speculation and encourage long term investment.