Capital gain definition

A capital gain is the profit you make when you sell an asset for more than you paid for it. It is the selling price minus the cost basis, the original purchase cost plus any allowable costs.

A capital gain can arise on financial assets such as shares, bonds, mutual funds, exchange-traded funds, cryptocurrencies, and real estate. The gain is unrealised while you still hold the asset, and it becomes realised only when you sell. Because it is locked in only on sale, you control the timing of when a gain is recognised.

A capital gain is the profit itself; capital gains tax is the tax charged on that profit once it is realised. The two are easy to merge but are separate things, and the tax due depends on your country, the type of asset, how long you held it, and your tax status. A gain that stays unrealised is generally not taxed, which is why the sale date matters.