Capital Gains
A capital gain is the profit made when you sell an investment for more than you paid for it. If you sell for less, that's a capital loss instead.
Why it matters
- Capital gains in non-registered (taxable) accounts are generally subject to tax, though rules and rates vary by country.
- A gain is only 'realized' — and taxable — once you actually sell; unsold gains are 'unrealized.'
- Capital losses can often be used to offset capital gains for tax purposes (tax-loss harvesting).
Simple example
- Buying a stock for $1,000 and selling it later for $1,400 creates a $400 capital gain.
- In a registered account like a TFSA, that same $400 gain would not be taxed at all.