A capital gain is the profit that is realized from the sale of a capital asset, such as real estate, stocks, or mutual funds. Capital gains are realized when the sale price of the asset is higher than the original purchase price, resulting in a profit for the seller.

Capital gains are typically taxed at a lower rate than ordinary income, although the specific tax rate will depend on the individual's tax bracket and the length of time the asset was held. Long-term capital gains, which are gains on assets that were held for more than one year, are typically taxed at a lower rate than short-term capital gains, which are gains on assets that were held for one year or less.

Capital gains can be an important source of income for individuals and businesses, but it is important to understand the tax implications of realizing capital gains and to accurately report them on tax returns.