Glossary
Definition
Capital Gains
Profit made from selling an asset for more than its purchase price.
Capital gains are profits realised from selling an asset (stock, real estate, etc.) at a higher price than it was purchased. Short-term capital gains (assets held for less than a year) are typically taxed as ordinary income. Long-term capital gains (assets held over a year) are taxed at preferential rates in most countries.
Frequently Asked Questions
Why do billionaires prefer to hold stock rather than sell it?
Selling triggers capital gains taxes. By holding stock, billionaires defer taxes indefinitely. Many instead borrow against their stock holdings to fund spending — loans are not taxable events.