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Simple English definitions for legal terms
long-term capital gain
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A quick definition of long-term capital gain:
A long-term capital gain is when you make a profit by selling something you own, like a stock or a piece of land, that you've had for more than a year. It's different from short-term capital gain, which is when you sell something you've owned for less than a year. Long-term capital gain is usually taxed at a lower rate than short-term capital gain.
A more thorough explanation:
A long-term capital gain is the profit made when a capital asset is sold or exchanged after being held for more than a year. A capital asset can be anything from stocks to real estate.
For example, if you bought a stock for $100 and sold it for $150 after holding it for more than a year, the $50 profit would be considered a long-term capital gain.
It is important to note that long-term capital gains are taxed at a lower rate than short-term capital gains, which are profits made from selling or exchanging a capital asset held for less than a year.
Overall, long-term capital gains are a way for individuals to make a profit from their investments and are an important aspect of the tax code.