A profit that results from the sale of a capital asset (stock, bond, or real estate). The gain is the difference between the higher selling price and the lower purchasing price. Depending on the length of time that you have owned the asset will determine whether you are taxed on the profit as regular income or a lower capital gains rate. Check out Stock Basics for a more in depth look!
Side note: The sale of a piece of real estate can be considered capital gains if the money received isn’t spent towards other items. Contact your tax advisor if your are thinking about selling.
