“Capital Gains” refers to the income or positive difference between the value of a capital Asset (e.g., an investment or Stock) when it was purchased and its value when it is sold.

A Capital Gain can be either short-term or long-term. A short-term Capital Gain relates to a capital Asset held for less than a year whereas a long-term Capital Gain relates to a capital Asset held for longer than a year. The timeframe of the Capital Gain has different tax implications. Generally, long-term Capital Gains are taxed at lower rates than short-term Capital Gains.