Last updated: January 18, 2026
Capital gains occur when you sell an asset (like stocks, bonds, or real estate) for more than your purchase price. The difference between your selling price and cost basis is your capital gain.
Capital gains are categorized as short-term or long-term based on how long you held the investment. Most countries tax these differently, with long-term gains often receiving preferential rates.
Understanding capital gains is essential for tax planning. You can offset gains with losses (tax-loss harvesting) and time your sales strategically to minimize taxes.
Understanding capital gains helps you make better investment decisions and plan for taxes. Use our capital gains calculator to see how it applies to your situation.
Subtract your cost basis (purchase price + fees) from the selling price. For example, buy at $1,000, sell at $1,500 = $500 capital gain.
Short-term gains (held ≤1 year) are taxed as ordinary income up to 37%. Long-term gains (held >1 year) are taxed at preferential rates: 0%, 15%, or 20%.
Hold investments over 1 year for lower rates, use tax-loss harvesting to offset gains, and invest through tax-advantaged accounts like IRAs or 401(k)s.
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