What is the meaning of Capital gain?

When you sell an asset at a higher price than you paid for it, the difference is your' Capital gain'. For example, if you buy 100 shares of stock for $20 a share and sell them for $30 a share, you realize a capital gain of $10 a share, or $1, 000 in total. If you own the stock for more than a year before selling it, you have a long-term capital gain. If you hold the stock for less than a year, you have a short-term capital gain. Long-term capital gains are taxed at a lower rate than your other income while short-term gains are taxed at your regular rate. The long-term capital tax rates are 20% for anyone whose marginal federal tax rate is 27% or higher, and 10% for anyone whose marginal rate is 15%. Even lower rates apply to gains on assets purchased in 2001 or later and held at least five years for taxpayers in the 27% bracket or higher and to any assets held at least five years for taxpayers in the 15% bracket. You are exempt from paying capital gains tax on profits of up to $250, 000 on the sale of your primary home if you're single and up to $500, 000 if you're married and file a joint return, provided you meet the requirements for this exemption.