A Capital Gain refers to the profits or gains made from selling a security at a higher price than the original purchase price.

In stock trading, if an investor sells a stock for more than they bought it for (or the price inherited), the profit realized is a capital gain. The same applies to gains made in real estate.

To note, assets held within tax-deferred accounts, like IRAs and 401(k)s, do not trigger capital gains when sold for profits. It only applies to taxable assets, like stocks held in a brokerage account. The capital gains tax is the tax paid on net capital gains in a given year.

What is Capital Accumulation?
What is Capital Appreciation?