What is capital gains?

Capital gains are profits that are realized when an asset is sold for more than the purchase price. Capital gains can be short-term, which means the asset was held for one year or less before being sold, or long-term, which means the asset was held for longer than one year. The tax rate on capital gains depends on the individual's tax bracket and the type of asset being sold. Short-term capital gains are taxed at the same rate as ordinary income, while long-term capital gains are taxed at a lower rate. Capital gains can be realized on a variety of assets, including stocks, bonds, real estate, and collectibles.