Capital Gains

A capital gain happens when you sell an asset, such as stocks or real estate, for more than you paid for it. The profit from the sale is considered a capital gain. If your asset has gone up in value but you haven’t sold it yet, this is known as an unrealized or “paper” gain.

If you invest in mutual funds, keep in mind that these funds often distribute any gains from their investments to shareholders, typically at year-end. These distributions can also affect your tax bill.