Capital gains

Extracted Attributes

• Definition

  Profit earned on the sale of an asset that increased in value over the holding period.

• Asset Categories

  Tangible (real estate, cars, business) and Intangible (shares, bonds).

• Long-term Holding Period

  More than one year.

• Short-term Holding Period

  One year or less.

• Standard Individual Tax Rate (2024)

  15% of net capital gain for most individuals.

• Primary Residence Exemption (Single)

  $250,000 USD of profit excluded from taxation.

• Primary Residence Exemption (Married)

  $500,000 USD of profit excluded from taxation.

Timeline

• The tax rate on most net capital gains for individuals is established at 15% for the 2024 tax year. (Source: capital gains | Wex | US Law | LII / Legal Information Institute)

  2024-01-01

• Governor Josh Shapiro critiques wealth tax proposals on capital gains during an interview on the All-In Podcast. (Source: Document 9e10b3e6-1055-4dac-8018-251d2c0c67b1)

  2024-12-01

• The Wex Definitions Team at the Legal Information Institute reviewed and updated legal definitions for capital gains. (Source: capital gains | Wex | US Law | LII / Legal Information Institute)

  2025-06-01

Capital gain

Capital gain is an economic concept defined as the profit earned on the sale of an asset that has increased in value over the holding period. An asset may be tangible property, a car, a business, or intangible property such as shares. A capital gain is when the selling price of the asset is greater than the original purchase price. In the event that the purchase price exceeds the sale price, a capital loss occurs. Capital gains are often subject to taxation, of which rates and exemptions differ between countries. The history of capital gain originates at the birth of the modern economic system and its evolution has been described as complex and multidimensional by a variety of economic thinkers. The concept of capital gain may be considered comparable with other key economic concepts such as profit and rate of return, however, its distinguishing feature is that individuals, not just businesses, can accrue capital gains through everyday acquisition and disposal of assets.

Web Search Results

• capital gains | Wex | US Law | LII / Legal Information Institute

  Capital gains refers to profits gained from the sale of capital assets. Almost everything someone owns and uses for personal or investment purposes is a capital asset. This includes a home, personal-use items like household furnishings, vehicles, or intangibles such as stocks or bonds held as investments. When you sell a capital asset, the difference between the cost in the asset (known as the adjusted basis) and the amount you realized from the sale is either a capital gain or a capital loss. If a person sells an asset at a price that is higher than the adjusted basis -the original purchase price plus additional cost to you (such as if you spent money to improve a home before selling it), this would be a capital gain because you sold the asset for more than your adjusted basis. You have [...] There are two categories of capital gains: short-term and long-term. If the asset was held for one year or less, the capital gain is short-term. If the asset was held for more than one year, then the capital gain is long-term. To determine how long you held the asset, you generally count from the day after the day you acquired the asset up to and including the day you disposed of the asset. Different tax rates apply for long- and short-term capital gains. Beginning in 2024, the tax rate on most net capital gain is 15% for most individuals. Net capital gain is calculated from deducting capital losses from the total of capital gains. Last reviewed in June of 2025 by the [Wex Definitions Team] [...] sold the asset for more than your adjusted basis. You have a capital loss if you sell the asset for less than your adjusted basis. Like other forms of income, capital gains are subject to income tax. The tax on capital gains only occurs when an asset is sold or “realized.” For example, if Bob buys ten shares of Stock X for $10 and then sells the ten shares for $15, Bob’s capital gain is $50.

• 2026 Capital Gains Tax Calculator - Long-Term & Short-Term Gains

  ## What Are Capital Gains? When you sell an investment for more than you paid for it, that profit is known as a capital gain. Our capital gains calculator can help you estimate the tax implications of your investment decisions before you make them. This will allow you to input your purchase price, sale price, holding period, and tax bracket to determine how much you might owe in taxes. Whether you're selling stocks, real estate or other assets, our tool can provide valuable insights into the potential tax consequences of your decisions. A financial advisor can help you manage your investment portfolio and align it with your long-term goals. Speak with an advisor today. [...] Capital gains are defined as the profits that you make when you sell investments like stocks or real estate. These include short-term gains for investments held for one year or less and long-term gains for those held for more than a year. Capital gains and losses reflect the profit or loss realized when you sell an investment, but you only have to pay capital gains taxes after selling an investment as the money you make from an investment is subject to taxation at the federal and state levels. However, you may be able to reduce your capital gains taxes by selling an investment that you've lost money on, offsetting at least a portion of the gains. [...] If you're reading about capital gains, it probably means your investments have performed well, or you're preparing for when they do in the future. When you build a low-cost, diversified portfolio and the assets being held are worth more than what you paid for them, you might consider selling some of those assets to realize those capital gains.

• Topic no. 409, Capital gains and losses | Internal Revenue Service

  Almost everything you own and use for personal or investment purposes is a capital asset. Examples of capital assets include a home, personal-use items like household furnishings, and stocks or bonds held as investments. When you sell a capital asset, the difference between the adjusted basis in the asset and the amount you realized from the sale is a capital gain or a capital loss. Generally, an asset's basis is its cost to the owner, but if you received the asset as a gift or inheritance, refer to Publication 551, Basis of Assets for information about your basis. You have a capital gain if you sell the asset for more than your adjusted basis. You have a capital loss if you sell the asset for less than your adjusted basis. Losses from the sale of personal-use property, such as your home [...] To correctly arrive at your net capital gain or loss, capital gains and losses are classified as long-term or short-term. Generally, if you hold the asset for more than one year before you dispose of it, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term. For exceptions to this rule, such as property acquired by gift, property acquired from a decedent, or patent property, refer to Publication 544, Sales and Other Dispositions of Assets; for commodity futures, see Publication 550, Investment Income and Expenses; or for applicable partnership interests, see Publication 541, Partnerships. To determine how long you held the asset, you generally count from the day after the day you acquired the asset up to and including the day you [...] If you have a net capital gain, a lower tax rate may apply to the gain than the tax rate that applies to your ordinary income. The term "net capital gain" means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss for the year. The term "net long-term capital gain" means long-term capital gains reduced by long-term capital losses including any unused long-term capital loss carried over from previous years. The term “net short-term capital loss” means the excess of short-term capital losses (including any unused short-term capital losses carried over from previous years) over short-term capital gains for the year. ## Capital gains tax rates

• Capital Gains: Definition, Rules, Taxes, and Asset Types

  ### Short- and Long-Term Capital Gains Capital gains fall into two categories:1 Short-term: Gains realized on assets that you've sold after holding them for one year or less Long-term: Gains realized on assets that you've sold after holding them for more than one year Both short- and long-term gains must be reported on your annual tax return. Understanding the distinction between them and factoring it into an investment strategy is particularly important for day traders and others who trade securities online. [...] ## The Bottom Line Capital gains are the profits that are realized by selling an asset for a profit, such as stocks, bonds, or real estate. Long-term capital gains taxes are lower than ordinary income taxes, providing a tax advantage to many taxpayers, including homeowners and investors. Moreover, capital losses can sometimes be deducted from one's total tax bill. For these reasons, all those holding assets that they may sell should understand when and how capital gains taxes apply. Get personalized, AI-powered answers built on 27+ years of trusted expertise. When does my ETF's capital appreciation officially become a taxable gain? How can I qualify for a zero percent capital gains tax rate? How do capital improvements reduce the capital gains tax on my property? ASK [...] Close ## What Is a Capital Gain? A capital gain refers to the increase in the value of a capital asset that is realized when it's sold. A capital gain occurs when you sell an asset for more than what you paid to purchase it. The Internal Revenue Service (IRS) taxes individuals on capital gains under certain circumstances.1 Almost any type of asset you own is a capital asset. They can include investments such as stock, bonds, or real estate, and items purchased for personal use, such as furniture or a boat. ### Key Takeaways

• Capital Gains Tax Rates For 2025-2026 | Bankrate

  ## Capital gains tax: The basics Capital gains taxes are owed on the profits earned from the sale of assets such as stocks, real estate, businesses and other types of investments in non-tax-advantaged accounts. When you acquire assets and sell them for a profit, the U.S. government looks at the gains as taxable income. In simple terms, the capital gains tax is calculated by taking the total sale price of an asset and deducting the original cost. Taxes are only due when you sell the asset, not during the period where you hold it. There are various rules around how the Internal Revenue Service (IRS) taxes capital gains. For most investors, the main tax considerations are: [...] ### What is the capital gains tax on property sales? Again, if you make a profit on the sale of any asset, it’s considered a capital gain. With real estate, however, you may be able to avoid some of the tax hit, because of special tax rules. For profits on your main home to be considered long-term capital gains, the IRS says you have to own the home and live in it for two of the five years leading up to the sale. In this case, you could exempt up to $250,000 in profits from capital gains taxes if you sold the house as an individual, or up to $500,000 in profits if you sold it as a married couple filing jointly. If you’re just flipping a home for a profit, however, you could be subjected to a steep short-term capital gains tax if you buy and sell a house within a year or less. [...] While capital gains taxes can be annoying, some of the best investments, such as stocks, allow you to skip the taxes on your gains as long as you don’t realize those gains by selling the position. You could hold your investments for decades and owe no taxes on those gains, until you sell. ## How capital gains taxes work If you buy $5,000 worth of stock in May and sell it in December of the same year for $5,500, you’ve made a short-term capital gain of $500. If you’re in the 22% tax bracket (based on your taxable income), you have to pay the IRS $110 of your $500 capital gains. That leaves you with a net gain of $390.