What are Capital Gains?

Capital gains are the difference between a security’s purchase price and its selling price, when the difference is positive and sold at a profit.

When it comes to mutual funds, capital gains may also be realized without selling the security as a distribution of gains the fund has made and pays out to shareholders.

Capital Gains Calculator

To determine capital gains, subtract your basis (what you paid), from the amount realized (how much you sold it for). The difference is your capital gain if it is a positive number, or capital loss if it is negative.

Capital Gain/Loss = Selling Price – Purchase Price

What is Capital Gains Tax?

Capital gains tax is a type of tax applied to the profits earned on the sale of a long-term asset. These gains are usually taxed at a lower rate than income.

What Qualifies as Capital Gains?

Any asset that is sold for more than you paid for it qualifies as a capital gain. 

Short-term capital gains are assets held for a year or less and are typically taxed at a higher rate. Long-term gains are assets held for more than a year and are taxed at a lower rate.


Wealthspire Advisors is a registered investment adviser and subsidiary company of NFP Corp.
This information should not be construed as a recommendation, offer to sell, or solicitation of an offer to buy a particular security or investment strategy. The commentary provided is for informational purposes only and should not be relied upon for accounting, legal, or tax advice. While the information is deemed reliable, Wealthspire Advisors cannot guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with regard to the results to be obtained from its use. ©2021 Wealthspire Advisors

Related Posts

retirement savings

A “How To” Guide to Retirement Savings for the Self-Employed

In the past, I’ve received calls from clients who had already retired but decided to get back into the game ...


What Is Amortization? Amortization is an accounting technique that involves spreading out the cost of a debt over a period ...

Rule of 72 – Compound Interest

What Is Compound Interest? Compound interest is the interest on savings calculated on both the initial principal and the interest ...