A capital gain is an increase in the value of an asset that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. For example, if you buy a stock for $50 and later sell it for $100, you have made a capital gain of $50. Capital gains can be short-term (if the asset was held for one year or less) or long-term (if the asset was held for more than one year). Short-term capital gains are taxed at the same rate as ordinary income, while long-term capital gains are taxed at a lower rate.