What Are Capital Gains?

A capital gain is the profit you make when you sell an asset — like a stock, home, or piece of land — for more than you paid for it. Capital gains come in two types: short-term (held less than a year) and long-term (held more than a year). Long-term gains are taxed at lower rates (0%, 15%, or 20%) than short-term gains, which are taxed as ordinary income. You can reduce your tax bill through tax-loss harvesting. Losses from selling assets can offset your gains.