Capital Gains
The profit when you sell an investment for more than you paid. Hold longer than a year and it is a long-term gain, taxed at lower rates than ordinary income.
By Findley's Finance · Last reviewed: September 2026
Why it matters
The tax code rewards patience: short-term gains (a year or less) are taxed like wages, while long-term gains get preferential lower rates. This is why holding matters beyond market timing — selling a winner at month eleven versus month thirteen can mean a meaningfully different tax bill. Losses work in reverse: they can offset gains, which is the whole game behind tax-loss harvesting.
Concrete example
Buy for $10,000, sell years later for $15,000 — the $5,000 profit is a long-term capital gain.